Sec. 115. (6) Estoppel. (See McCarthy v. LaVasche, 89 III. 270, 31 Am. Rep. 83, supra, p.253.) Note. Voting alone is not sufficient to estop. 1882, Burgess v. Seligman, 107 U. S. 20; 1887, Union Sav. Ass'n v. Seligman, 92 Mo. 635, 1 Am. St. Rep. 776. FORM OF SUBSCRIPTION TO STOCK IN A CORPORATION TO Be formed. The following is suggested as a form for such subscription: This agreement entered into among the parties whose names are undersigned witnesseth: That for and in consideration of the advantages arising to each of us from concert of action through the form of a corporate organization, and of the mutual promises and agreements herein contained, made each for himself and with each of the others who have heretofore or who do hereafter sign this agreement, subscribing for shares of stock in the corporation to be hereafter formed, and of the further consideration of the efforts made and to be made by [John Smith, and, etc.,] in procuring signatures hereto subscribing for stock in said proposed corporation, upon the terms herein contained, and aiding in incorporating and organizing the same, and of the further consideration of $1 by each of us paid to each of the others, the receipt whereof is acknowledged,' do hereby covenant and agree to form a corporation such as hereinafter indicated, and do hereby, under our hands and seals (hereby severally agreeing that one seal shall be the seal of each), subscribe to the stock of such corporation the amounts set opposite our names, and do hereby constitute and appoint the said [John Smith, etc.,] our agents and attorneys to procure such subscriptions, and aid in organizing such corporation (for which services said Smith, et al., are to receive the sum of dollars, to be borne by each of the parties hereto in the proportion the stock subscribed by him bears to the total stock subscribed, or for which services said Smith, etc., are to receive shares of the stock of such corporation, fully paid up) agreeing hereby to pay to said Smith, etc., —, or, at their request, to said corporation, the sum of the sum of dollars upon each share subscribed, when dollars shall be subscribed, or at such time thereafter as days' prior notice, for the purposes herein they shall designate upon after set forth. This agreement shall become operative only in case the sum of dollars shall be subscribed. ; ; in shares of dollars each, The name of said corporation shall be The location of the principal office shall be The purpose of such corporation shall be The amount of capital stock shall be to be paid for as follows: — dollars upon request of agents herein named as above set forth, the balance upon call of directors in such sums and at such time as the directors of such corporation shall designate upon days' previous notice]. Said corporation shall be organized under the laws of the state of It would seem that such a provision was useless, but Mr. Taylor, Law of Private Corporations, § 94, does not think so. Hence its insertion here. Summary of Contracts, § 186, 2 Mr. Taylor, § 94, and Prof. Langdell, in think the agreement should be under seal. Names. Seals. No. of Shares. Amount. For form of World's Fair subscription contract, see 1 Cook Corp. (4th ed.) p. 190. ARTICLE IV. FORMS. CONDITIONAL SUBSCRIPTIONS. Sec. 116. Conditions may be express or implied. ANDERSON ET AL. V. MIDDLE AND E. T. CENTRAL R. CO.1 1891. IN THE SUPREME COURT OF TENNESSee. 91 Tenn. 44, 17 S. W. Rep. 803. Appeal from chancery court. LURTON, J. A number of subscribers to the original stock of the defendant company have joined in filing this bill for the purpose of enjoining suits at law upon their several contracts of subscription. The corporation, expressly waiving all questions of jurisdiction, answers, and submits the liability of complainants to the judgment of the court, and by cross-bill seeks a recovery against each of them. The learned chancellor was of opinion that no liability existed, and perpetually enjoined suits at law, and dismissed the cross-bill. support of this decree a number of propositions have been urged. In 2. The capital stock was fixed by the corporators, at a meeting held for purposes of organization, at $3,000,000. Something less than $50,000 of this had been taken when this bill was filed. Complainants' contention is that, until the whole of the stock is taken, they can not be made liable for calls on their subscriptions. It is well settled that there is an implied condition that the amount of stock specified in the charter, articles of association, or contract of subscription, or fixed by the corporators when authorized to settle same, shall be actually taken before the subscribers shall become liable. Read v. Gas Co,, 9 Heisk. 545; Mor. Priv. Corp., § 156; Burt Priv. Corp., $535. This implication may, however, be rebutted by the terms of the charter, or the provisions of the enabling act, articles of association, action of stockholders or corporation fixing capital, or by the conditions of the contract of subscription. So a subscriber may waive such condition, and this waiver may be either express or implied. A waiver will generally be implied if the subscriber consents. to the letting of contracts, the creation of debt, or the doing of any 'Part of opinion and arguments omitted. corporate act involving the necessity of calling in the subscribed stock, unless the charter expressly forbid the doing of any corporate act until the requisite capital is taken. Mor. Priv. Corp., § 156; Burt Priv. Corp., 535, and authorities cited. There is nothing in the charter or resolution fixing the amount of capital stock, or in the original contract of subscription, rebutting the usual implied conditions, and taking their contract of subscription out of the general rule of law. But, after the original subscription had been made, a majority of the subscribers entered into the following agreement: "For the purpose of enabling the Middle and East Tennessee Central R. Co. to put their road under construction from the Chesapeake and Nashville Railroad to Hartsville, Tenn., the undersigned subscribers to the capital stock of the said M. & E. T. C. R. Co. agree that they will pay their said subscriptions as fast as the work progresses, provided that not more than 25 per cent. shall be called for in any one month." Upon the faith of this agreement the directors let out a contract for the construction of the very part of the projected line contemplated by this agreement, being eleven and one-half miles, and covering the route between the Chesapeake and Nashville road and the town of Hartsville. The contractors were shown this supplementary agreement, and, upon the faith of it, accepted a contract to construct so much of the road as was agreed to by that paper, and had completed about 70 per cent. of the work when this suit was begun. The obvi ous effect of assenting to this agreement was to waive the implied condition that the whole of the stock should be raised, and was an undoubted agreement that the work should begin at the Chesapeake and Nashville Railroad instead of the town of Gallatin. Some of the complainants did not sign this agreement, and are not shown to have assented, by votes or otherwise, to the commencement of work or the creation of debt. There is proof that at a meeting of subscribers it was unanimously resolved that the directors should let out a contract for that part of the line between Gallatin and Carthage, but it is not shown that the complainants who failed or refused to sign the agreement above set out in any way participated in this meeting, or that their stock was represented. We therefore decide that such of complainants as did not sign the agreement assenting to the beginning of the work between the Chesapeake and Nashville Railroad and the village of Hartsville are not now liable to have their stock called. The remainder of the complainants have expressly agreed to the beginning of construction and to the payment of their stock as work progressed, and as to them this implied condition has been waived. 3. Certain other positions remain to be considered as to those of complainants who have waived the condition that the full capital stock. should be raised. It is said that the defendant company is now insolv ent, and that the original scheme for a route from Gallatin to Knox ville can not be carried out, and that the enterprise has been dwarfed to a short link, beginning eight and one-half miles from Gallatin, and terminating at Hartsville. It is urged that the charter provided for a road beginning at Gallatin, and not at a point on the Chesapeake and Nashville road, eight and one-half miles from Gallatin, and that it should terminate at Knoxville, and not at the town of Hartsville; that complainants are business men and property owners in Gallatin, and that the scheme into which they entered contemplated a great through road, passing through the coal-fields of the Cumberland Mountains, and connecting their city with other lines of railway and with the flourishing city of Knoxville. They further insist that to procure their subscriptions the officers and agents of the company represented that no calls would be made upon their subscriptions until the company had secured a contract whereby, if it should build to Carthage, it could consolidate with a road thence to Knoxville, to be built by a Mr. Crawford, and that no call should be made until the Chesapeake and Nashville road was constructed into Nashville, and a running arrangement made by which the trains of the defendant company should be carried into Nashville over the track of the Chesapeake and Nashville; that none of these things have been done, or are now possible; and that, therefore, they should not be held liable. The company, for answer to the objection as to the beginning point of the road under construction, interpose an alleged amendment to the charter, fixing the beginning point at the Chesapeake and Nashville Railroad, near Gallatin. This amendment was obtained in 1884, upon application. of the directors, as provided by the act of 1875, as amended by the act of 1883, ch. 163. It was duly registered in Sumner county, but appears never to have been registered with the secretary of state. This neglect makes the amendment, even if otherwise valid, ineffectual and void. An amendment must be registered as the original, and, until this is done, is subject to the same objection which renders void a defectively registered charter. Brewer v. State, 7 Lea 682. Another amendment was obtained pending this suit, changing the termini to the Chesapeake and Nashville Railroad near Gallatin, and the town of Carthage in Smith county. This amendment seems to have been in all respects properly registered. By it the capital stock was reduced to $350,000. This reduction does not help the case, inasmuch as it is not shown that even this has been taken, to say nothing of other objections not necessary to consider. Without passing upon the validity of this second amendment, we are of opinion that, whether valid or invalid, the complainants are estopped to question their liability as subscribers. They expressly agreed that, to enable the company to put under construction the line between the Chesapeake and Nashville Railroad and town of Hartsville, they would pay their subscriptions as that work progressed, in calls of 25 per cent. monthly. It is too late now to say that the line has not been begun at Gallatin, or that it can not be carried beyond Hartsville. We know of no reason why this company might not have begun the work of construction at any point on the line between Gallatin and Knoxville. If its finances should prove insufficient to connect the part so constructed with the charter termini, this ought not, in law or equity, to relieve the subscribers who assented to the beginning of so 33-WIL. CASES. great an enterprise upon so insufficient a capital. The representations made to induce subscriptions were all made antecedent to the written contract of subscription, and upon this ground, as tending to contradict the written contract, were excluded. This ruling was doubtless correct. * Decree reversed as to all complainants, except Anderson, Miller and Thompson. Note. See Denny Hotel Co. v. Schram, 6 Wash. 134, 36 Am. St. R. 137, infra, p. 553; Angell & Ames, §§ 146, 543; Beach, §§ 531-41; Boone, § 110; Clark, §§ 107-9; Cook, §§ 77-89; Elliott, §§ 352-9; Morawetz, §§ 78-93; Taylor, §§ 517, 518-21; I Thompson, §§ 1235-42; VII Ib., § 8612. That all stock must be subscribed before any subscriber, who is not estopped by his own acts, shall be called upon to pay anything except for preliminary or organization expenses, see 1827, Salem Mill Dam Corp. v. Ropes, 6 Pick. (Mass.) 23; 1854, Stoneham Branch R. Co. v. Gould, 2 Gray (Mass.) 277; 1872, Peoria & R. I. R. Co. v. Preston, 35 Iowa 115; 1876, Warwick R. Co. v. Cady, 11 R. I. 131; 1878, Allman v. Havana R. & E. Co., 88 Ill. 521; 1879, Banty v. Buckles, 68 Ind. 49; 1885, Halsey Fire Eng. Co. v. Donovan, 57 Mich. 318; 1886, Rockland Mt. D. & S. S. Co. v. Sewall, 78 Maine 167; 1887, Haskell v. Worthington, 94 Mo. 560; 1889, Anvil Mining Co. v. Sherman, 74 Wis. 226; 1891, Association v. Walker, 88 Mich. 62, 49 N. W. 1086; 1894, Stearns v. Sopris, 4 Colo. App. 191; 1895, McKay v. Elwood, 12 Wash. 579; 1898, Cusick v. Bartlet, 91 Maine 153; 1898, McFarland v. West Side Imp. Assn., 56 Neb. 277, 76 N. W. 584. But see 1855, York, etc., R. v. Pratt, 40 Maine 447; 1878, Cheraw, etc., R. v. White, 10 S. C. 155; 1891, Hamilton v. Clarion, etc., R., 144 Pa. St. 34. This rule, however, does not apply to subscriptions to authorized increases of stock. 1856, Nutter v. Lexington, etc., R., 72 Mass. 85; 1877, Clarke v. Thomas, 34 O. S. 46; 1886, Delano v. Butler, 118 U. S. 634; 1889, Avegno v. Citizens' Bank, 40 La. Ann. 799; 1891, Bank v. Eaton, 141 U. S. 227; 1891, Port Edwards, etc. R. v. Arpin, 80 Wis. 214. Sec. 117. Express conditions may be attached to subscriptions made (1) before, or (2) after incorporation. Payment of deposits. TAGGART v. THE WESTERN MARYLAND R. COMPANY.1 1866. IN THE COURT OF APPEALS OF MARYLAND. ports, 563-597, 89 Am. Dec. 760. 24 Md. Re Action by railroad company to enforce stock subscriptions. The general assembly, at January session, 1852, incorporated “The Baltimore, Carroll and Frederick Railroad Company," with a clause prescribing certain preliminaries usually observed in opening the books and taking subscriptions for stock, prior to the organization of a company, among others, the prepayment of $1 per share on every share subscribed; also, requiring the road therein contemplated to be commenced within three years and finished within ten from the pas sage of the act, otherwise the same should be null and void. Books 1 Arguments omitted; statement of facts, except as appears in opinion of court, omitted. Part of opinion relating to other points, omitted. |