Beach v. . Smith

30 N.Y. 116 | NY | 1864

Lead Opinion

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The subscription of this defendant was made under similar circumstances to that of Clarke, in the case of Black River andUtica Railroad Company v. Clarke, (25 N.Y. 208). We then said that the intent of the section of the general railroad act, requiring the payment of ten per cent. in cash on the amount of the subscription, to be made in cash at the time of subscribing, doubtless was that no subscription should be valid until ten per cent. was paid thereon, and not that it should be invalid if a short interval should occur between the actual subscription and the payment of the money. The subscription and the payment of the ten per cent. must both concur to make a valid subscription. The subscription one day, with payment the next, would satisfy the statute; and so would actual payment at any period after subscription, with intent to effectuate and complete the subscription. The writing of the name in the subscription book should be deemed but part of the transaction, and provisional or conditional till the ten per cent. is paid. But after the payment, and as was said in that case, certainly after the payment of forty per cent. on the subscription, the statute requirement on this point must be deemed fully complied with by the defendant. There is nothing to distinguish the case now under consideration from that just referred to. It is apparent that the defendant commenced acting for the company as early as April, 1853, and his subscription was not made until July 2d of that year. It is fairly inferrible, from the amount of his account, that the company, at the date of his subscription, was indebted to him in an amount greater than the cash payment of $50, required on his subscription. It would have been an idle ceremony for the company to have handed him the amount due, and for him to have paid it back to the company on his subscription. It is, however, sufficient, under the authority of the case just cited, that ten per cent., or first amount to be paid, has been subsequently paid, to render the subscription valid and binding upon the defendants. On the 25th of February, 1854, he in fact not only paid this ten per cent., but the first installment called for of ten per cent. payable on the first day of that month. He had, therefore, on that day paid twenty per cent. on the amount of his subscription, and he can not now be permitted to allege that it was invalid because he did not, at the time of subscribing, pay the ten per cent. in cash. The charging himself with, and the allowance by the company in the settlement with the defendant, of both of these installments, was a voluntary payment of them by this defendant to the company, quite as much so as if the company had handed to him in cash the whole amount of his account, $410, and he had immediately handed back the sum mentioned therein, amounting to the sum of $200. The allowance by him to the company of these sums, and the payment of the balance, was a payment of them by the defendant to the company.

The judgment must be affirmed, with costs.

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Concurrence Opinion

I am not prepared to hold that a subscription for the stock of a railroad company organized under the general law is valid, if the ten per cent. required to be paid at the time of subscribing, is not paid. It seems to have been the opinion of the chancellor in Jenkins v. Union Turnpike Company (1 Caines' Case in Error, 86), that a subscription for stock without the payment of the five dollars required to be paid on each share at the time of subscribing, was void when the subscription was made to the stock before the organization of the corporation, but if made after, it might be valid. The statute under which the subscription in question is made, not only requires ten per cent. to be paid, but it forbids the subscription to be received without such payment. It seems to me that a subscription taken in violation of this prohibition is not binding.

But this court has held that the subscription may precede the payment of the ten per cent., and that when the ten per cent. is paid, the subscription is valid from that time. (Black River andUtica Railroad Company v. Clarke, 25 N.Y. 208.)

The only remaining question is, whether the ten per cent. has been paid?

The payment was in services performed under a contract with the company. No price was agreed on for the services before they were rendered. The price must have been ascertained before there could be an application of them on the stock. When the account was rendered and allowed, the defendant was owing the company that portion of the stock which had been called for by the directors, and the company owed him for services. The payment by each to the other was effected by the company crediting the services on the stock. Was it necessary for any purpose, that the ceremony of paying money by the company to the defendant, and by the defendant of the same money back again, should be gone through with? It seems to me not.

Concede the agreement to take pay for the ten per cent. in services as illegal and void, yet the services were actually rendered. The company could have resisted payment by setting up the illegal agreement. It was optional with the defendant whether he would pay anything on the stock; but he did pay by allowing a portion due him for services to be credited on the stock.

I think this was a ratification of the subscription, and a payment of the ten per cent.

The judgment should therefore be affirmed.

All the other judges being for affirmance, except SELDEN, J., who was inclined to reverse, judgment affirmed.