ful source of litigation and disaster. Tending to the ensnarement of creditors, and contrary to a sound public policy, conditional subscriptions to corporate shares ought not to be encouraged. Their validity, however, is too firmly fixed by a long line of decisions, to be now overturned, yet the courts will not strain, where creditors are concerned, to convert independent covenants into conditions precedent. If a subscriber desires to make his liability depend upon the performance of some stipulation by the corporation, it is very easy for him to do so in express terms. In the case now under consideration, it is obvious that the subscribers did not intend to make the building of a depot at Newbern a condition upon which their liability should depend. They expressly provide that one-fourth of their subscriptions shall fall due when the line of the road is completed to the county line.

Now, this was a condition precedent, but when it was complied with the subscription became absolute, and one-fourth payable at once, and the remainder as the work progressed through the county, in four installments, four months apart. Now, a depot at Newbern would be folly without a railroad in operation, and every installment might fall due by lapse of time and continued work within the county, before a depot would be of any practical value. The fact that the first call became payable when the road reached the county line, settles the meaning attached to this stipulation. The acts stipulated to be done are to be done at different times. Hence they are independent of each other, and the remedy of the subscriber for breach of such a stipulation is in damages. Goldsborough v. Orr, 8 Wheat. 217.

The defendants have pressed upon us the case of Railroad v. Curtis, 80 N. Y. 219, s. c. 1 Eng. and Am. Railroad Cases, as sustaining the conclusion of the circuit judge.

This case has been carefully examined, and we are of opinion that it in no way supports the contention of defendants. The contract in that case was one between subscribers, whereby they agreed to become subscribers to the stock of the railroad company upon certain conditions. They did not, as held by the court in that case, become shareholders in præsenti, but only pledged themselves to one another to thereafter subscribe, and upon condition that the road should be actually constructed by the Lake Shore Company through the town of Parmer. The court held that the actual building of the road by the Lake Shore Company was a condition precedent, and that this condition had never been complied with.

The case of N. & N. W. R. Co. v. Jones, 2 Cold. 574, is likewise relied upon. It decides nothing that is in conflict with our view of this case. That case was action by the company against the subscriber who had subscribed upon the express stipulation that his subscription should be void unless the road was constructed upon a certain line. The directors did locate the road upon the agreed line, but afterwards abandoned this line and constructed the road upon a totally different line. This court properly held that, by the very terms of the subscription, it became void by this action of the company.

The view we have taken as to the construction of this contract, and

the effect of the insolvency of the company upon the stipulation as to a depot at Newbern, is supported by a number of well-considered cases in the courts of other states.

Berryman v. Trustees, Southern Railway, 14 Bush 755; Winkler v. Railroad, 29 Mo. 218; McMillen v. Railroad, 15 B. Monroe 218; Swartwout v. Railroad, 24 Mich. 389; Miller v. Railroad, 40 Pa. St. 237; Chamberlain v. Railroad, 15 Ohio St. 225.

This brings us to a consideration of the question as to whether a suit for the last installment of these stock subscriptions can be now maintained. The subscription provided for the maturity of the calls subsequent to the first in the following language:

"The remainder of the amount subscribed to be paid in four equal installments of four months, as the work on the road progressed through the county." The work was progressing at the time the second, third and fourth calls were made, and there can be no doubt but that they were rightfully called and properly demanded. But when the last installment was called all work had been abandoned and has never been since resumed. We are of opinion that this last installment has never matured. The requirement that the calis subsequent to the first should be made in equal installments "as the work progressed through the county," is a condition precedent to the maturity of each installment; and the abandonment of the work before it was finished, and before, in a point of time, the last call could have been made if the work had been carried on in good faith, defeats the action of this installment. No right to call for or sue upon this installment exists by reason of the failure of the company to show that the road was finished, or work going on, within the county at the time it was demanded. The objection is made by defendants that these suits can not be maintained because no tender of stock certificates has been made.

This assignment of error is not tenable. This is not a case of the purchase of stock certificates as negotiable securities. The tender in such a case might be necessary to maintain suit for the price. But no tender is necessary to maintain suit upon an ordinary subscription for stock. Morawetz on Corporations, §§ 61 and 148 (2d ed.). Judgments as to Parks and Harris reversed.

Note. See citations, §116, supra, p. 514.

Sec. 123. Conditional delivery of subscriptions. Escrows, the

ories of:

(a) Delivery can not be to company's agent.

1855. İN

WIGHT v. SHELBY RAILROAD COMPANY.1

THE COURT OF APPEALS OF KENTUCKY.
(Ky.) Reports, 4-8, 63 Am. Dec. 522.

Judge SIMPSON delivered the opinion of the court.

16 B. Mon.

As the same questions are involved in both these cases, and as the 'Part of opinion on other points omitted.

validity of the defense presented in both, has to be examined in each case, we will proceed to consider and decide such questions as arise upon the record in either case.

The defense, relied upon by Wight, that the subscription of stock made by him was left with one of the commissioners in the nature of an escrow, is wholly invalid. The commissioners were the persons appointed by the charter to receive and accept subscriptions of stock, a subscription received by them, even if such a writing could, under any circumstances, be made to assume the nature and attributes of an escrow, could not take that character, inasmuch as, when it was received by them, it became just as obligatory on the party making it as a promissory note would be upon the maker who left it with the payee, or his agent. The well-settled doctrine is that to make a writing an escrow merely, it must be placed in the hands of a third person by the party making it, to be delivered to the other party, on the happening of a specified contingency. Here the subscribers were the parties on one side, and the commissioners on the other. A subscription when made and received by the commissioners could not, therefore, be a mere escrow, but became in law an absolute undertaking for the payment of the stock subscribed according to the provisions of the charter.

So far as the defendants, or either of them, alleged that their subscription was conditional, and was not to be obligatory upon them, unless the road was located on a certain route, it is only necessary to remark that, the contract being in writing, parol proof is inadmissible to alter its terms or to show that, instead of being absolute, as it purports to be, it was in reality conditional. The subscribers might have annexed a condition to the terms of their subscriptions, if they had thought proper to do so, and it would then have been with the commissioners to determine whether such conditional subscriptions of stock would be received; but, not having done so, they can not, according to the well-established doctrine on the subject, allege or prove that the contract was different from that which is evidenced by the writing, unless they can establish fraud or mistake in its execution.

The failure to pay the sum of $1 on each share of stock subscribed can not certainly be relied upon by the subscribers as exonerating them from their liability for their subscriptions. It was their duty to pay it at the time the stock was subscribed, but they should not be allowed to take advantage of their own wrong, and release themselves from their whole obligation by a failure to perform a part of it. Even if the commissioners might have refused to receive the stock, unless the payment had been made, yet, as they did not do it, the contract was, after the stock had been received without the payment, binding upon both sides.

The decision of the court in the case of the Union Turnpike v. Jenkins, 1 Caine's Reports 381, sustains the views expressed in this opinion, and it is only the opinion of the dissenting judge that is cited in Angell & Ames on Corporations, and referred to by the counsel for the appellants.

The decisions of the Massachusetts courts, on some of the questions involved in these cases, have not been followed by this court.

In our opinion none of the defenses presented by either of the appellants was a sufficient answer to the plaintiff's action.

Wherefore, the judgment in both cases is affirmed.

Note. See note at end of next case.

Sec. 124. Same.

(b) Delivery may be to company's agent.

CASS v. PITTSBURGH, VIRGINIA AND CHARLESTON RAIL-
WAY CO.1

1875. IN THE Supreme Court oF PENNSYLVANIA. 80 Pa. St. Rep. 31-38.

MR. JUSTICE SHARSWOOD delivered the opinion of the court May 29, 1876.

The subscription of the plaintiff in error to the stock of the defendants was upon condition "that in the judgment of the board of directors of said company a sufficient amount is subscribed to the capital stock of said company on or before the first day of April, 1871, to grade and bridge the road, including the right of way from South Pittsburgh to West Brownsville." The board of directors, on the first day of April, 1871, passed a resolution, "that, in the judgment of this board, the conditions named are fully complied with; that suf ficient stock has been subscribed to grade and bridge the road, including the right of way from South Pittsburgh to West Brownsville."

The third assignment of error is to the rejection of an offer to prove, in substance, that the agent of the defendants by whom the subscription had been procured before it was reported to or accepted by the company, at the request of the plaintiff, agreed to hold back the subscription until he should authorize him to hand it to the company, and that afterward a third person, not a member of the board, obtained possession of the paper, under pretense of merely wishing to look at it, put it into his pocket, and without consent of the agent or defendant, delivered it to the company. We think this evidence ought to have been received. It is true, as a general rule, that delivery of a bond or deed as an escrow can not be made to the obligee or grantee. That principle, however, does not apply in this case. When a delivery of an absolute deed is made to the party, his acceptance is presumed prima facie, because it is for his benefit. Then subsequent acceptance relates to the first delivery. So it might have been now, had the subscription been absolute, but it is different when the condition imposes a burden upon the other party. He must then expressly or impliedly accept before the contract becomes completely binding on both parties. When such contract is made with an agent 'Only the part of opinion relating to the one point given.

if

he may well agree to hold it as an escrow. Until both sides agree, irrevocable by one it must be also by the other. Martin, the agent, had no authority to accept the conditions, and was not incapacitated from making such an agreement by his relation to the company. Reversed.

Note. See, also, 1889, Minneapolis Threshing Machine Co. v. Davis, 40 Minn. 110, supra, p. 492; 1897, Gilman v. Gross, 97 Wis. 224; 23 Am. & Eng. Ency., p. 790; Beach, § 510; Clark, § 113; Cook, § 60; Elliott, § 357; Morawetz, §§ 69, 851; II Thompson, § 1253.

ARTICLE V. FRAUD AND MISTAKE IN SUBSCRIPTIONS.

Sec. 125. Fraud.

94 Va.

MARTIN ET AL. v. SOUTH SALEM LAND CO. ET AL.1 1896. IN THE Supreme COURT OF APPEALS OF VIRGINIA. Rep. 28-59, 6 Am. & Eng. Corp. Cas. (N. S.) 312. [Suit by various parties against the land company, among others being one by the Bank of Salem, a judgment creditor suing on behalf of itself and others, the land company and its stockholders to enforce their stockholders' liability for unpaid stock. Many of the stockholders answered that their subscriptions had been obtained fraudulently, and they had promptly repudiated them, and asked to have them rescinded. Decree of a pro rata assessment against the stockholders to pay the debts was rendered, from which an appeal was taken.]

BUCHANAN, J. Another ground on which the appellants claim that they are not liable for their subscription contracts is, that they were induced to become subscribers by the false and fraudulent representations of the company or its agents. One of the false and fraudulent representations which it is alleged was made to certain of the appellants was, that there was no promoter's fund except $10,000 of the paid-up stock of the company, when, in fact, two of the promoters of the scheme, Crabtree and Bowman, were to receive the sum of $20,000 additional, in money, and that they did receive the greater part thereof. To others it was represented that among the subscribers to the stock of the company were two well-known business men, of much experience and large wealth, when, in fact, one of them had made no subscription at all, and the other had subscribed for a much less sum than was represented. And to others still both these representations were made.

If it be assumed that these representations were made and relied on; that they were not true, and were sufficient to entitle the appellants to have their contracts rescinded, and the money paid by them refunded, as between themselves and the Land Company, did they

1 Statement of facts abridged, arguments omitted and the part of the opinion relating to the one point only given.