Opinion
(December Term, 1859.)
1. An allegation that a corporation was not properly organized, and, therefore, had no authority to collect a subscription made to its capital stock, is a question that can be tried in a court of law.
2. An allegation that a subscription to the stock of an incorporated railroad company was to be paid in work and materials, also that it was made upon a condition that the road was to be located on a particular site, are matters cognizable by a court of law.
3. Where the charter of a railroad company was altered after a subscription was made to its stock, so as to substitute one terminus for another, and done without the consent of the subscriber, it was Held, that having no power to go into a court of equity to enforce the original charter against the authority of the Legislature, he was exonerated from his subscription, and that he might make such defense in a court of law in a suit for the subscription.
APPEAL from an interlocutory order of the Court of Equity of (114) ROBESON, Caldwell, J.
Kelly, Fowle, and William Mc. McKay for plaintiff.
Person for defendants.
The plaintiff in his bill alleges that the charter granted to the defendants authorizes them to construct a railroad from Wilmington or Smithville, or some point on the Wilmington and Manchester Railroad, in the county of Columbus, or some point on the Wilmington and Weldon Railroad, in the county of New Hanover, as the stockholders might determine, via Lumberton, Rockingham, Wadesboro, and Monroe, to the town of Charlotte, and thence to the town of Rutherfordton, taking the most feasible route between these places, to the stock of which he subscribed ten shares of $50 each, making a cash subscription of $500, on which he paid 5 per cent; that it is provided in the said charter that whenever the sum of $500,000 should be subscribed, and 5 per cent thereon paid, the subscribers should be incorporated into a company; that as soon as that sum should be subscribed, the commissioners taking the subscriptions should appoint a time for the stockholders to meet at Wadesboro; that they did so appoint, and a few persons met at the time and place designated, and it was reported to them that $500,000 had been subscribed according to the requirements of the charter, and 5 per cent thereon paid; that it was not true that $500,000 had been subscribed, and that the required percentage had not been paid on the amount subscribed, for that of the subscriptions taken by the commissioners a large amount was by persons notoriously insolvent, and that, therefore, the said subscribers had no power to organize the company; that they did proceed, nevertheless, to appoint the defendants directors, and appointed one Daniel C. McIntyre an agent to solicit further subscriptions; that the said Daniel applied to the plaintiff, told him that if he would raise his subscription by taking twenty shares more no part of his subscription would be required in money, but that the whole would be received in work and materials for the construction of the road, and that he was also informed that the road would be located on the southwestern side of Lumber River, which he avers was the most (115) feasible and advantageous route; that he was further informed that the directors had passed a resolution that no money would be required of him until $600,000 was subscribed in addition to what had been subscribed west of Charlotte, and $200,000 which had been promised to be subscribed by the town of Wilmington; in consequences of which assurances he did make a further subscription of twenty shares, amounting to $1,000, upon the express condition that no part thereof would be required to be paid in money; that he gave his note at the time of this subscription for the 5 per cent required to be paid by the charter, and he insists that, by the terms of the charter, the said subscription is void because such payment of 5 per cent was not paid in cash. The bill alleges, further, that the said road had been so located as to cross the Lumber River three times within a distance of 30 miles, and to run a great portion of that distance through deep, dense swamps and quagmires, whereas if it had been located on the southwestern side of that river it would have had to be crossed only once, and would have been upon a high, dry, level site. The bill further alleges that the defendants, or some of them, in concert with other persons, without the consent or concurrence of the plaintiff, and much to his inconvenience and detriment, in the year 1856, procured the Legislature to alter the terms of the act of incorporation so as to authorize the commencement of the road at any point on the west bank of the Cape Fear River, or at the town of Wilmington, and that in pursuance of the same the eastern terminus of the said road has been fixed at a place called Walker's Ferry, in which he has not acquiesced, and which deprives him of much of the benefit and advantage he had expected from the completion of the undertaking, and which formed the main consideration for his uniting in it. The bill further alleges that the additional subscriptions which he was assured would be made before any money would be collected of him have not been made.
The bill further states, that notwithstanding the promises and assurances made to the plaintiff as to the location of the road and as to the conditions on which the money would be required of him and (116) the mode in which subscriptions were to be discharged by him, and notwithstanding the material alteration made in the terms of the charter without his consent, the defendants have commenced a suit against the plaintiff in a court of law, in the name of the Wilmington, Charlotte, and Rutherfordton Railroad Company, on the note given by him for the 5 per cent of his subscription, and are threatening to enforce the whole of his two subscriptions, amounting to $1,500, by collecting the money.
The prayer is for an injunction to restrain the defendants from collecting or in any manner enforcing the subscriptions of the plaintiff, and for general relief.
The defendants demurred to the bill generally, and the cause coming on to be argued on the demurrer, his Honor ordered that the same be overruled, and the defendants answer. From this order the defendants appealed to this Court.
No rule is better established than the one that a party cannot maintain a suit in equity for any injury done or threatened where the law affords him a full and adequate remedy. The inquiry in the present case, then, will be whether the allegations made by the plaintiff in his bill — all of which are admitted to be true by the demurrer — established a claim for relief which the courts of common law cannot completely and effectually give. In prosecuting this inquiry we will waive the objections which have been urged to the frame of the bill and assume that it is proper in form, correct as to parties, and suitable as to the relief sought. Giving to the plaintiff all these advantages — which is certainly as much as he has a right to ask and more than we are prepared, if it were necessary, to admit — we are decidedly of opinion that there is not one of his grounds of complaint upon which he could not have defended himself at law against any threatened wrong of the defendants. (117)
The first allegation is that the Wilmington, Charlotte, and Rutherfordton Railroad Company was never properly organized as a corporation, and, therefore, never had any power or authority to act as such. If that were true, then it could not, as a corporation, compel the plaintiff to pay his subscription, and he might avail himself of the defense at law. R. R. v. Wright, 50 N.C. 304.
The second allegation avers that when the plaintiff made his subscription the company, through its agent, expressly promised that payment of it should not be demanded in money, but that it might be paid in work and materials to be furnished by him for the construction of the road; and further, that his subscription was made upon the express condition that the road should be located along a certain designated route, from which the defendants had wrongfully departed. If there were a valid agreement for the payment of the plaintiff's subscription in work and materials, instead of money, we cannot perceive any reason why he may not plead it at law against any suit to recover the money. A corporation is as much bound by its contracts as a natural person, and cannot avoid or evade them either in law or equity. The same may be said with regard to the violation of any binding stipulation made with the plaintiff with regard to the route of the road. If the departure from the stipulated route were one not sanctioned by the charter, then, indeed, the plaintiff might come into a court of equity to enjoin the defendants from acting contrary to the provisions of the charter and to compel it to adopt the route therein prescribed. Blackmore v. Glamorganshire Canal Navigation, 6 Eng. Con., ch. 544; Wiswall v. Plank Road, 56 N.C. 183; Norwich v. R. R., 30 Eng. Eq., 144. In this case the bill is not framed for any such purpose, and there is no prayer that the defendants may be enjoined from locating and constructing the (118) route through the swamps and across the bed of the Lumber River, as stated in the bill; but if it were in this respect properly drawn, the route described is not such an one as is not within the limits of the charter, and the plaintiff is, therefore, compelled to rely upon any defense which his own contract with the company may furnish; and that is one which, taking his own statement to be true, may be availed of at law.
But the most plausible allegation of the plaintiff is that the defendants, after his subscription had been made, procured from the Legislature an amendment to their charter, and, acting under it, had changed the eastern terminus of the road without his consent and against his wishes and to the great detriment of himself and others, who had made their subscriptions upon the faith that such terminus would be at one of the points specified in the original charter. Taking this to be true, the plaintiff is clearly released from his obligation to pay the amount of his subscription. He may well say non haec in federa veni; and as he has no power to enjoin the defendants in equity from doing what the Legislature has expressly authorized to be done, he may make his defense at law when called upon for payment. Winter v. R. R., 11 Geo., 438; Turnpike Co. v. Locke, 8 Mass. 268; Same v. Swan, 10 Mass. 385; R. R. v. Crowell, 5 Hill (N. Y.), 386; R. R. v. Leach, 49 N.C. 340.
Our opinion, then, is that, upon the merits of his case, the plaintiff has failed to show himself entitled to any equity upon which to compel the defendants, or any of them, to answer his bill.
The demurrer must, therefore, be sustained and
PER CURIAM. Bill dismissed.
(119)