Opinion
(August Term, 1854.)
Where A had agreed, conditionally with others, to subscribe a certain amount to the stock of an incorporated company, and B and C agreed with him in writing, if he would do so unconditionally, they would each take one-fourth of such stock off of his hands by subscribing for it in their own names, and A afterwards made such subscription absolutely, held, that equity would decree the specific performance of such agreement.
CAUSE removed from the Court of Equity of ROWAN, Spring Term, 1854.
Boyden and H. C. Jones, for plaintiffs.
W. P. Caldwell, for the defendants.
Under the charter of the North Carolina Railroad Company, after unsuccessful efforts had been made to raise the sum of one million dollars, which was required to be subscribed by individuals before the subscription of two millions was to be made by the State, about eight hundred thousand dollars remaining to be subscribed by individuals, a number of persons associated themselves together for the purpose of raising the remainder of the sum required in a written agreement, called "the hundred-man plan," which was as follows:
"Whereas, only a part of the one million of individual (262) subscription to the North Carolina Railroad Company is taken; whereas the purpose of this agreement is to take and secure the balance of the one million of individual stock not already subscribed, and to be subscribed by others, we, the undersigned, interchangeably agree with each other and the said company, to take each the one hundredth part of the said balance of the said individual stock. This agreement to be binding on none unless one hundred persons or companies subscribe the same, or the entire amount be made up. Each person or company to be at liberty to subscribe as many shares of the hundred as he or they please, and bound for no more than his or their own subscription. 29 November, 1849."
To which agreement the plaintiff E. D. Austin, amongst many others, signed his name with the hope and expectation, as he alleges in his bill, that his friends would relieve him from the burthen which he had thus undertaken, by joining with him and taking a part of the sum off of his hands. Accordingly, he applied to the defendants Roseborough and Gillaspie to assist him in this emergency, and they, together with one A. J. Fleming, agreed and undertook, in writing, as follows:
"Whereas, there is an arrangement, commonly called the hundred-man plan, entered into to secure the charter of North Carolina Railroad, in which arrangement each subscriber does engage to take the one-hundredth part of the said stock not taken by other individuals, and each is bound only for the amount of his own subscription, and whereas, E. D. Austin has become a subscriber on that plan;
"We, the undersigned, interchangeably agree with each other to take each such proportion of said share as shall be annexed to our names of the said individual stock already taken by the said E. D. Austin, (263) and to be bound for no more than his own subscription. 2 March, 1850. "E. D. AUSTIN, "OTHO GILLASPIE, 1-4, "R. M. ROSEBOROUGH, 1-4, "A. J. FLEMING, $200."
After the execution of this agreement, and, as he alleges, partly induced by it, he went forward, and on _____, in due form, subscribed on the books of the North Carolina Railroad Company his estimated share of the remaining unsubscribed individual stock, to-wit, the sum of eight thousand dollars, upon which he paid, as required by the charter, five per cent.
The bill alleges that the railroad company, who are a party plaintiff, have been willing, and are still willing, to accept the defendants as subscribers to the shares engaged with Austin to be taken by them, and to discharge and release him from so much thereof, and the plaintiff Austin alleges that he has frequently made application to them to make the subscription according to their written agreement, but that they refuse so to do. He states that since his subscription to the stock of the company he has sold and transferred to others eighteen hundred dollars worth of the stock subscribed by him, and he offers to allow a deduction of their proportion of that sum from the subscription asked to be made by them. As to Fleming, he says he has paid his subscription, and he has no ground of complaint against him. The prayer is for specific performance of the agreement, and for general relief.
The defendants allege in their answer and insist that this contract was without consideration, was not mutual, and that it was made on the promise and assurance of the plaintiff Austin that he could and would get large and beneficial contracts for them to do work on the railroad, and that they were to form a joint company to work out the stock proposed to be taken, and were to pay no money beyond their proportion (264) of the five per cent already paid by plaintiff, and that plaintiff not only failed to get such contracts, but did not endeavor to do so, and that the specific execution of the contract would be oppressive to them and unreasonable. They say further that they believed at the time of entering into the agreement that Austin had already made an unconditional subscription to the stock of the company.
There was replication to the answer and proofs taken, the material portion of which is noticed in the opinion of the Court.
An attentive examination this case has led us to the conclusion that the agreement entered into between the plaintiff Austin and the defendants is a binding contract, and being in writing, signed by the defendant, is one of which the court of equity, acting upon its well-established principles, will decree a specific performance. It may be admitted that at the time when this agreement was made it was merely voluntary and not obligatory upon the parties for the want of a consideration; but when the plaintiff Austin afterwards went forward and subscribed on the books of the North Carolina Railroad Company for eighty shares of stock, in pursuance of what was called "the hundred-man plan," it changed its character, and became invested with all the essential qualities of a valid contract. From the recital which precedes the agreement, and which is explanatory of its objects, it plainly appears that the plaintiff Austin had not then become a subscriber for stock upon the books of the railroad company, but that he had entered into an arrangement with others to do so whenever a sufficient number of men could be found to secure the charter of the company by taking the required amount of stock not taken by others. It appears, (267) further, that this arrangement or plan was reduced to writing, and that each person who signed it was called a subscriber, and in that sense, and not in the sense of having become already a subscriber on the books of the railroad company for stock, was the term used. This is clearly manifest from its being stated expressly in the recital that the arrangement commonly called the hundred-man plan was "intended to secure the charter of the North Carolina Railroad Company." From this recital, introduced for the very purpose of explaining the agreement which the plaintiff Austin and the defendants were about to enter into, it is clear that when the parties spoke of the "said individual stock already taken" by the plaintiff, they did not mean stock for which the plaintiff had already subscribed in the books of the company, but only what he had previously engaged with others to take in order to secure the charter of the company. Admitting, then, that when the agreement in question was signed by the parties the defendants were bound in honor only, and not in law, to fulfill it, and that they might have notified the plaintiff and thereby have avoided it, yet when the plaintiff, relying upon their engagement to take a portion of the stock for which he might subscribe, went forward and by his subscription on the books of the company bound himself to pay for eighty shares of stock in such manner as might be required by the company, the defendants became legally bound to relieve him by taking a certain portion of such stock. The weighty obligation assumed by the plaintiff of paying, either in money or work, eight thousand dollars towards the accomplishment of what was supposed a great public improvement, in which profits to the individual subscribers were indeed anticipated, but were necessarily somewhat doubtful and contingent, and were certainly not to be realized for several years, formed undoubtedly a valuable consideration for the (268) defendant's promise to him. But the defendants object that the contract is one for the transfer of stock in a public company for the breach of which the plaintiff has his remedy at law, and that therefore the court of equity will not interfere to give the extraordinary relief of decreeing a specific performance. This objection might avail when applied to a contract for the sale and transfer of stock in a company already in existence, and whose stock had in market a certain or nearly certain value. In such a case damages at law would afford an adequate and complete redress. 2 Story Eq., sec. 717. But the slightest reflection will convince any one who turns his attention to the subject that this is a very different case. Here the North Carolina Railroad Company was just struggling into life, and the subscribers for its stock were taking upon themselves very heavy burdens, with a dim prospect of future advantage. It would therefore be manifestly impossible to give to the plaintiff, in a suit at law, damages at all commensurate with the injury which he might sustain by failure of the defendants to fulfill their engagement with him. 1 Story Eq., sec. 717, 718, 719. This view of the case answers also the objection that it would operate hardly upon the defendants to compel a specific execution of their contract. It would be much harder upon the plaintiff if it should not be done. Ibid., sec. 724, et seq. It is objected further, for the defendants, that the remedy must be mutual, "that it is requisite that a mutual enforcement in specie be practicable." Adams Eq., 80. That is so; and here we think there can be no doubt that the defendants could compel the plaintiff Austin to transfer to them the number of shares which they agreed to take. But it is objected again for the defendants that though they signed the agreement in question, they did so upon the express understanding and engagement that he was to procure for them contracts for work and labor in grading the track of the railroad, which would save them from the payment of their subscriptions in money, and that their (269) agreement with the plaintiff was to become obligatory upon them only in the event of his procuring for them such contracts. These alleged stipulations of the plaintiff were, it is admitted, not inserted in the written agreement, because the defendants thought they might rely upon the parol promise of the plaintiff to fulfill them. The doctrine of courts of equity is that they "will allow the defendant to show that by fraud, accident or mistake the thing bought is different from what he intended, or that material terms have been omitted in the written agreement, or that there has been a variation of it by parol, or that there has been a parol discharge of a written contract," and that if any of these things be shown by parol they will decline to interfere, and leave the party to his remedy at law. 2 Story Eq., sec. 770. Whether the present case comes within the operation of the doctrine it is unnecessary for us to decide, for if it does, the defendants have altogether failed in proving their allegations. From the proof it rather appears that although the subject of procuring contracts for work on the road was discussed between the parties, and although a plan for obtaining such contracts by the plaintiff and the defendants and others was actually drawn up in writing, yet the paper was never signed, and was finally abandoned, and it seemed to be understood that each party was to procure for himself such contracts as he could.
Upon a review of the whole case we think we have shown that the agreement between the plaintiff Austin and the defendants is founded upon a valuable consideration, is mutual and capable of being mutually enforced in specie, is of such a nature that an enforcement in specie is necessary to the plaintiff and not oppressive to the defendants, and our conclusion, therefore, is that such agreement, being in writing and signed by the defendants, ought to be specifically enforced by this Court. Adams Eq., 78, et seq. The North Carolina Railroad Company, which has been made a party plaintiff for that purpose, states its willingness to accept the defendants as subscribers for its stock in (270) lieu of the plaintiff Austin, who may, upon making a ratable deduction for the eighteen shares of which he was relieved by the company, have a decree according to his prayer.
PER CURIAM. Decree accordingly.
Dist.: Branch v. Tomlinson, 77 N.C. 391.