24 Barb. 199 | N.Y. Sup. Ct. | 1857
The terms of the subscription, and the testimony, conclusively establish the position that the subscription of the defendants was not to be binding unless the sum of $300,000 was actually subscribed. It was incumbent on the plaintiff, as essential to his right to recover, to establish the fulfillment of the condition precedent—that this sum had been subscribed; and for this purpose he produces and proves' the subscription book, which contains first, a statement under date of Nov. 8,1855, in these words: “ The trustees of the Atlas Mutual Insurance Company, in order to show their desire and determination to place the company in an independent position, do subscribe the amount set opposite their names, on the same conditions set forth in the resolution of the board of this date, to be paid in cash or notes, at thirty, sixty, ninety days, or four months, provided that the amount of $300,000 is subscribed under that resolution.” Then follows the names of sixteen persons, and opposite thereto $50,000. Next we have a copy of the subscription of $40,000, being that referred to, without doubt, in the resolution of October 30, 1855; and then succeeds the subscription of Nov. 8, 1855, already referred -to, and which, in fact, only amounts to the sum of about $212,500. Then follows a subscription amounting to $48,000. by the gentlemen who had agreed to subscribe $50,000, provided the $300,000 subscription was made up, and then other subscriptions amounting to near $6000. The original subscription of $40,000 is produced, and bears date October 12,1855. The subscription which the defendants signed, and the engagements which they entered into, contains the significant stipulation that this subscription is not to be binding until the sum of $300,000 is subscribed.” Now it is obvious from the date of the subscription of $40,000, and the terms of the engagement to subscribe $50,000, that they were both regarded as independent subscriptions to that for $300,000.
I have not overlooked the resolution of the board of trustees of Nov. 8, 1855, in which they say that the subscription is to be binding when $300,000 is subscribed, including the $40,000 already subscribed. It is sufficient to say that this is not the contract of the defendants. The terms of the subscription signed by them contain no such provisions, but the emphatic one that it is not to be binding until the sum of $300,000 is subscribed thereto. I am now considering the subscription of November 8, 1855, as containing what it purports, legal and valid subscriptions ; and the sums there appearing, disregarding those of the $40,000, and $50,000, amount to about the sum of $212,500. What is the effect of such a condition in a subscription 1 Undoubtedly that it must be complied Avith before the liability attaches. Such is the agreement of the parties, and such are their legal obligations.
The rule, as I understand it, is well stated by Chancellor Walworth, in Stewart v. Trustees of Hamilton College, (2 Denlo, 403.) That was an action brought by the trustees of Hamilton College against Stewart, to recover from him a subscription to the funds of that institution. The subscription contained a provision that the subscribers were not to be holden “ to pay the sum subscribed by us, unless the aggregate of our subscriptions shall, by the 1st of July, 1834, amount to $50,000. It was proven on the trial that the nominal amount of the sub
As establishing the same principle, I refer to the case of' Sandford v. Handy, (25 Wend. 475.) In that case proposals were issued to form a joint stock company for the sale of certain lands. The lands, were to be divided into 23 shares of $5000 each, and the defendant subscribed for one share. All the shares were not subscribed for. The supreme court were of the opinion that by the true construction of the contract all the shares were to be subscribed for before any subscriber should become liable upon his subscription, and that this was a condition precedent—and the whole number of shares not having been taken, the defendant was not liable. It will be observed that in this case there was no express provision in the subscription paper, that the whole number of shares should be taken; but the court holding that by the true intent and import of the agreement, all the shares were to be taken, such taking was a condition precedent to the defendant’s liability.
The plaintiff’s counsel has referred to another case upon this same contract, in 2 Denio, 235, and confidently relies upon it as an authority to sustain the -defendants’ liability in this case. The. supreme court had held in conformity with their decision in 25 Wend, (supra,) that the subscription of the whole number of shares, as clearly implied on the face of the agreement, constituted a very material part of it, and deeply affected the separate interest q£ each subscriber, and that the defendant could not be made liable, as this material condition of the contract had not been complied with. The court of errors reversed
This ease is disembarrassed from the difficulty arising in that. In the agreement under consideration, is an express stipulation that the same “ is not to be binding until the sum of $300,000 is subscribed.” If I am correct in the view I have taken of the facts in this case, $300,000 was never subscribed to that subscription, but only about $212,500. It never, therefore, became the defendant’s subscription. The condition precedent on which he agreed to become a subscriber, did not arise, and therefore no legal liability attached to him in consequence of that conditional engagement.
But it is contended on the part of the plaintiff, that taking all the three subscriptions together, the same amounts to the sum of $300,000, and therefore the condition has been performed and the defendant’s engagement is complete. I have already stated the difficulties in maintaining this position. The first and obvious one is, that such is not the defendant’s agreement; when he signed this he saw preceding it two distinct, separate and independent subscriptions, one of the 12th of October, 1855, for $40,000, and the other an engagement by sixteen persons that they would subscribe the sum of $50,000, provided, the sum of $300,000 was subscribed under the resolution of November 8, 1855. It is apparent to my mind, that originally these three subscriptions were regarded as separate and independent.
It is sufficient for this case to say that there is nothing in the agreement signed by the defendants to warrant the ground now assumed, that the $40,000, and the $50,000, subscriptions, were to be deemed part of the $300,000 which ivas to be subscribed before such subscriptions were to be binding. I do not think such was originally the intent of the parties. It will he seen that the terms of both these subscriptions were entirely
The plaintiff contends that as the whole sum of $300,000 was actually subscribed after the date of the 12th of October, this court is to hold, that within the fair meaning and intent of the subscription, signed by the defendants, the sum of $300,000 was subscribed, and therefore the .condition was fulfilled. This is on the assumption that 'the subscription of $40,000 and that of $50,000 (in fulfillment of which $48,000 appears to have been only subscribed) are included as part of the $300,000 subscription. The objections to this have already been stated. It is not alleged that all the subscriptions made after October 12, including that, exceed the sum of $300,000. It is said that the sum total of the whole just equals that sum. In this total is included the $40,000 subscription of October 12. That subscription, as is apparent from the terms of the resolution of October 30, had been placed on a footing different
But it is argued that the defendants must have known that this $40,000 subscription was to be taken as part of the $300,000 subscription, and the terms and conditions upon which it had been made. First. Because the trustees, in their resolution of November 8, 1855, authorizing this subscription, stated that it should be binding when $300,000 was subscribed, including the $40,000 already subscribed. Second. That the reference to that resolution, in the subscription signed by the defendants, adopts it as part of the terms of the subscription. In relation to the first position, nothing was said in the resolution of November 8, of the terms upon which the $40,000 had been subscribed, and although the trustees might have intended that the subscription should be binding on all the subscribers, when $260,000 additional was subscribed, such clearly is not the language or true construction of the subscription. That is the agreement of the defendants, and by that must they be bound; any intention of the trustees not communicated to them, and assented to by .them, can have no significance in determining their liability; and it seems to me that the reference the subscription to the resolution of the trustees was not of such a character as to lead the defendants and the other subscribers to suppose that it contained any thing else than the general authority to raise a subscription to the amount of $400,000. It certainly cannot be fairly said that this reference adopts the provisions of that resolution, that the subscription was to be binding when $260,000 was subscribed, when the subscription itself contains a contrary stipulation. The latter must govern as being the contract of the defendants.
Conceding that the defendants had agreed to be bound, pro-
Could these companies thus subscribe to the capital stock of the Atlas Insurance Company ? This point was ruled in the negative by the supreme court of Connecticut. (Mutual Savings Bank v. Meriden Agency Company, 24 Conn. Rep. 159.) The chief justice in delivering the opinion of the court in that case says : “ But when the directors of the company subscribed
I shall content myself with citing a single case from the English reports for the rule on this subject as established there. The case of the East Anglian Railway Company v. Eastern
Applying these principles to the present case, it is quite clear that no power was given to the officers of these various companies to make this subscription, and thus if they had the power, subject the property of their stockholders to the hazards of a business carried on by another corporation, in whose management they had no voice or control, or to appropriate the funds and property of their shareholders to the payment of losses sustained by another corporation, or to the discharge of debts incurred by it. No such departure from the powers conferred on these companies, or from the duties imposed upon them, can be sanctioned by this court. Such acts are unauthorized and void, and although these companies did subscribe to this fund the sum of $37,000, it was in fact no subscription, and the necessary amount to make it binding by its terms on the. defendants, supposing all the residue properly made up, remained deficient to this amount..
But it was contended on the argument, that supposing this objection tenable, it appeared by the testimony that the Atlas Insurance Company had realized the proceeds of all their subscriptions of those companies, except that of the International and Philadelphia Insurance Company, amounting to $7000, and $2500 of that of the Astor Mutual Insurance Company. It appears that the notes received from these companies, thus realized, were passed away by the Atlas Mutual Insurance Company, and if the doctrine of the supreme court of Connecticut is sound, any payment made by these companies, being upon a void subscription and without consideration, may be recovered back. It is, therefore, far from safe to say, that the Atlas Insurance Company has received the avails of these subscriptions. It is quite beyond contradiction, that of these subscriptions, $9500 are still unpaid by these companies, .and if the law is as an
But assuming that I am in error, in reference to the binding force and validity of the subscription of these companies, there is an objection to that of one of them, which is fatal to it, and sufficient to reduce the subscription below the $300,000. I allude to that of the International Insurance Company. That was never authorized by the directors of that company or known to them. It was proven on the trial of this case that it was made under an agreement between the two companies for a mutual exchange of notes for the sum of $5000. That these companies had no authority to make such exchange, needs no argument to fortify and illustrate. That such an arrangement was a fraud upon the other subscribers, we have seen to be established, and consequently it vitiated the whole transaction. In the language of Chancellor Walworth, already cited, the essence of such an agreement is that there should be perfect equality among all the subscribers as ,to the nature and extent of their respective liabilities. Ho such equality is preserved by such an arrangement, but is equally, if not more, vicious and objectionable, than the arrangement in reference to making the $40,000 subscription confidential. It was proven that several of the individual subscriptions were made upon terms and arrangements, not common to other subscribers, being taken, on account of debts past due by the company to the persons making the subscription, the condition being if he would subscribe, it should apply in part payment of the debt due and the balance would be paid by the company. This arrangement was equally a fraud upon the other subscribers, and vitiated the transaction.
I am, therefore, constrained to hold, in every aspect in which I have regarded this case, that the condition precedent, which the parties agreed to and reduced to writing, and which was • made part of the agreement upon which these defendants are now sued, viz : That the-same was “not to be binding until the
Judgment for the defendants.
Davies, Justice.]