120 Ind. 6 | Ind. | 1889
This action was brought by the Eagle 'Cotton Mills Company, of Madison, Indiana, a manufacturing corporation organized under the general law of this State, .to collect $4,000 alleged to be due from Charles L. Cravens ¡upon a subscription made by the latter to the capital stock of the plaintiff. The facts are set out at great length, and in .minute detail, in a special finding made by the court. Those ¡material to present the questions for decision are the following : In November, 1883, a communication was presented to the Merchants and Manufacturers’ Club, a voluntary association of the city of Madison, in which it was stated that the Eagle Cotton Mills Company, a corporation owning and •operating two large cotton mills in the vicinity of Pittsburgh, Pennsylvania, with a view of transferring its business to this -State, would sell all its machinery, including the good-will of its business, to an Indiana corporation, if one were legally organized. The price proposed was $100,000, of which amount $40,000 would be required to be paid in cash, and $60,000 in the capital stock of the new corporation. The scheme was regarded favorably by the club, and by the citizens of Madison, and the Eagle Cotton Mills Company, of Madison, Indiana, was duly organized and incorporated on .the 13th day of November, 1883, the object of its formation being to acquire and own a cotton mill, and to engage in the manufacture of raw cotton into textile fabrics. The proposition theretofore made to the Merchants and Manufacturers’ Club was under consideration when the Eagle Cotton Mills Company was organized, and while its stock was being subscribed for. The capital stock was fixed at $250,000, and was ■divided into shares of $25 each. The defendant was one of the incorporators of the company, an active promoter of the organization, and solicited subscriptions to its stock, and sub
On the appellant’s behalf it is contended that the contract of subscription was subject to two conditions precedent, viz.: “ 1. That $125,000 of solvent subscriptions, including $60,-000 promised by the Eagle Cotton Mills Company of Pittsburgh, Pennsylvania, should be obtained ; and 2. That the contract with the above named company for the purchase of its mills should be ratified by the votes of those holding a majority of the capital stock.”
Conceding that the first condition had been fully performed, the appellant’s position, as we understand it, is, that the second condition had not been performed, because the contract entered into with the Pittsburgh corporation, and ratified by the vote of the stockholders of the plaintiff corporation, was not the one made or contemplated by the parties and referred to in the contract of subscription, and that the defendant had, therefore, the right to withdraw his name as a subscriber. Moreover, it is said that the contract between the two corporations was, for various reasons, ultra vires, and void.
The court found that the contract which the stockholders of the Madison corporation ratified was not made until after the stock was all subscribed; that an arrangement of some kind was under contemplation at the time, but had not been definitely agreed upon, and that there was, in fact, no contract between the two corporations when the subscription was made.
The appellant assumes that the written contract of subscription shows that a definite contract existed for the purchase of the Pittsburgh company’s mills at the time the subscriptions were made ; that he subscribed for stock with reference to that contract, and that the finding of the court that there was no contract, rests upon a violation of the rule which
It is equally well settled, however, that the first duty of the court in interpreting a contract is to discover the intention of the parties, and while that must be done solely by considering the meaning of the language employed in the instrument, yet when the terms employed are susceptible of more than one meaning, it is the duty of the court, not only to regard the nature of the instrument, but also to inform itself of the circumstances which surrounded the parties at the time, so as to interpret the language employed from the standpoint which the parties occupied when they executed
If the words of the instrument are clear in themselves, it must be construed accordingly, but if they are susceptible ■of more meanings than one, the court must avail itself of the light enjoyed by the parties when the contract was executed, .so as to arrive at the meaning of the words, and give them a correct application to the persons and things described. Springsteen v. Samson, 32 N. Y. 703. Where the language employed admits of more than one construction, one of which renders the contract insensible, that construction will be adopted which will give effect to the contract; and, in cases of doubt, the practical construction which the parties themselves have given it will be of great, if not controlling, influence. Reissner v. Oxley, 80 Ind. 580; Lyles v. Lescher, 108 Ind. 382, and cases cited; Chicago v. Sheldon, 9 Wall. 50.
The relations existing between the Pittsburgh corporation and the plaintiff at the time the appellant subscribed for stock, were matters collateral to the contract of subscription, .and in no manner affected, or entered into, the contract of the latter with the plaintiff. Singer Mfg. Co. v. Forsyth, supra; Eighmie v. Taylor, 98 N. Y. 288.
It was essential, however, in order that the contract of. subscription might be intelligently applied to the collateral matters therein referred to, that the court should be informed of the relations existing between the two corporations at the time the subscription was made. It was therefore competent for the plaintiff, when the appellant claimed exoneration from his subscription on the ground that the contract between the two companies, in respect to the amount of stock which the Pittsburgh company had agreed to subscribe, or
It is contended that one corporation can not sell its property and good-will to another, and that the agreement that the president of the one should be elected a director and president of the other, was invalid, and that the whole contract was therefore ultra vires. ~We do not deem it necessary to enter upon an examination of these questions. In the view we take, the stipulation in the contract of subscription by which the amounts subscribed were not to become payable until the contract for the purchase of the mills had been ratified, was in no sense a condition precedent to the liability of the subscribers for stock. As we have seen, that stipulation had reference to a matter wholly aside from, and collateral to, the contract of subscription. It was essentially an independent covenant, by which it was, in effect, agreed that no contract should be finally made for the purchase of the Pittsburgh company’s mills without the consent of the majority of the stockholders. The Madison corporation in no way bound itself to purchase the cotton mills owned by the Pittsburgh company, nor was its absolute right to collect its stock subscriptions in any way conditioned upon the future purchase of those mills. If the Pittsburgh mills had never been purchased, or if after the contract of purchase was negotiated, it had been rejected by the stockholders, it would hardly be maintainable that the Madison corporation would have thereby lost its right to enforce payment of its stock subscriptions in order to carry out the purpose for which the corporation was organized. To give the contract
Since it was not made a condition precedent to the appellant’s liability that a contract with the Pittsburgh corporation of a specified character should first be made, he can not now defeat the collection of his subscription by assailing the contract that actually was made. He was content that the board of directors should exercise their best judgment in obtaining and agreeing upon terms of purchase, with the stipulation that his subscription should not become payable until the contract of purchase, if one was agreed upon, was ratified by a majority of the stockholders. This the court finds has been fairly done, and it is now too late to assail the contract in an action to collect the subscription price of stock. Thus it has been said :
“A subscriber for stock in a corporation can not defeat an action to collect such subscription by the defence that the directors or the corporation itself have done corporate acts which are beyond the corporate powers. There are other remedies open to the subscriber. He may either impair such ultra vires acts, or may have them set aside if already accomplished. * * * Thus it has been held that a subscriber can not defeat an action to collect his subscription by showing that the corporation has, without authority of law, and in excess of its powers, executed a lease or sale of the road; or illegally issued its bonds; or purchased shares of its own stock, or of another corporation; or changed the location or route of the road. The last instance especially, has been a frequent defence, but has been uniformly discountenanced by the courts whenever the change is made, not by an amendment to the charter, but by the arbitrary, unauthorized act of the corporate authorities. * * *
These subscriptions are made to take stock in an existing- or proposed corporation, upon a condition precedent, as for example, upon condition that a specified amount of subscriptions should thereafter be obtained. The contract of the several subscribers is two-fold in character. It is, in a sense, a contract between the several subscribers which can not be withdrawn or revoked as to any one without the acquiescence of all. It is also a continuing offer or proposition to-the corporation to take and pay for the amount of stock subscribed, upon the terms proposed, whenever the specified-amount of subscriptions shall have been obtained. The ob-i taining of the amount specified within a reasonable time is-an acceptance of the proposition or offer by the corporation, and the contract of each subscriber then becomes absolute- and unconditional. Minneapolis, etc., Co. v. Davis, 41 N. W. Rep. (Minn.) 1026; Morawetz Corp., section 47. A subscriber can not withdraw his subscription, even though it be-conditional, unless unreasonable delay occurs in performing-the condition. Johnson v. Wabash, etc., Plank-Road Co., 16 Ind. 389; Lake Ontario, etc., R. R. Co. v. Mason, 16 N. Y. 451; McClure v. Peoples’, etc., R. W. Co., 90 Pa. St. 269.
When the plaintiff obtained solvent subscriptions for the amount specified, that became an effectual acceptance of the
Questions of minor importance, involving the right of the plaintiff corporation to prosecute the suit in its own name, its power to make by-laws, and whether or not it was fully organized when the subscription in question was made, are presented in the briefs. It is sufficient to say, while these questions in no way affect the merits, we have considered them, and find no error in the record. Both parties having by entering into the contract sued on assumed the existence of the corporation, both are now estopped from denying it. Whitney v. Wyman, 101 U. S. 392.
The judgment is therefore affirmed, with costs.