Opinion
(September Term, 1897.)
Corporation — Subscription to Stock — Liability of Delinquent Subscriber — "By," Meaning of, as a Designation of Time.
1. When used to designate a terminal point of time, the word "by" means "not later than"; hence a condition affixed to a subscription to the capital stock of a corporation that a certain amount should be subscribed for "by July 1st" was fulfilled by the total subscriptions reaching such amount on the night of July 1st.
2. Under section 664 of the Code, a corporation is empowered to provide by its by-laws for the sale of shares of a subscriber who makes default in paying the assessments.
3. Where the by-laws of a corporation provided that if any stockholder should fail to pay his installments when called by the directors for two months, the stock should be declared forfeited and sold for account of the delinquent, publicly, after thirty days notice, and that the proceeds of such sale should be applied to the payment of the amount due on the subscription, and the balance, if any, should be paid to the delinquent, but that such forfeiture and sale should not relieve the delinquent from his original subscription: Held, that such by-laws was a reasonable one, and the subscriber whose stock was duly declared forfeited and sold for less than its face value can be required to pay the difference between his subscription and the amount for which it was sold.
ACTION tried on appeal from a justice of the peace, before Greene, J., and a jury, at July, 1897, Special Term of PASQUOTANK.
G. W. Ward for plaintiff. (15)
No counsel for appellant.
The action was for $200, the difference between the amount of defendant's subscription to the stock of plaintiff corporation and (13) the amount for which the stock sold after having been declared forfeited according to the by-laws of the company.
The only issue submitted on the trial was:
"Is the defendant indebted to the plaintiff, and if so, in what sum?"
Defendant appealed.
The agreement was, that the subscription was not to be binding unless the sum of $80,000 was subscribed "by 1 July." The full amount named was subscribed at the meeting held on the (16) night of 1 July. This was a performance of the condition."By" has many significations, but when used to designate a terminal point of time it is defined by the Century Dictionary to mean "not later than," "as early as." The Standard defines it, "not later than," and Webster, "not later than," "as soon as." The condition, therefore, "by 1 July," meant that the whole amount should be subscribed "not later than" 1 July. It has been held that a bill or note for the payment of money "by 1 November" is due on that day. Preston v. Dunham, 52 Ala. 217; Randolph on Com. Paper, sec. 110. A note payable "by 20 May" is due on that day. Stevens v. Blount, 7 Mass. 240; 1 Daniel Neg. Inst., sec, 43. In like manner, a promise to pay "against 25 December" is due on that day. Goodloe v. Taylor, 10 N.C. 458. A note payable "on or by" a certain day is payable on that day. Massie v. Belford, 68 Ill. 298. A contract to deliver "900 bushels of barley by 1 November" is performed by its delivery on or before that day. Coonley v. Anderson, 1 Hill (N. Y.), 519.
The evidence is uncontradicted that the stock was duly advertised and sold in accordance with the terms of the company's by-laws, notice first having been sent the defendant by mail, who admits receipt. His denial of having seen the advertisement has no bearing. It is true that, in the absence of statutory authority, the power to declare stock forfeited for nonpayment of assessments is not inherent in a corporation (23 A. and E. Enc., 818), but the Code, sec. 664, empowers corporations to provide by their by-laws, inter alia, "the mode of selling shares for nonpayment of assessments." The by-law in this case is a reasonable one. The defendant has been unfortunate, but he has no valid ground of objection to the proceeding by which he has both lost his stock and been adjudged to pay the difference between his subscription and the price for (17) which the stock was sold. He would have avoided all loss if he had paid for his stock according to the terms of his subscription. The other stockholders had a right to hold him to his contract. If this were not so, all corporate enterprises would fail in the beginning.
No error.
Cited: Blalock v. Clark, 133 N.C. 308.