19 Iowa 263 | Iowa | 1865
When this case was here before, the liability of the defendant was resisted chiefly upon the ground that whilst the subscription itself upon its face was unconditional, it nevertheless, as a matter of fact, was coupled with a condition agreed upon at that time, but which for some reason not very well defined, was omitted to be inserted therein as a part of the contract, and that the company had wholly failed to observe the same. The court was asked to reform the contract in the particular specified, to the end that the non-observance of the condition referred to by plaintiffs might be made available as a defense. The court below did so reform the contract, but this court reversed its action for the reason that, in the opinion of a majority of the court, it did not sufficiently appear, from the facts in the case, that the omission to insert the alleged condition in the contract was the result of fraud, accident or mistake, or that it was understood and intended by the parties that it should have been incorporated in the same. The exposition of the law touching the reformation of contracts on that occasion was, it is believed, correctly stated.
By leave of the court, the defendant amended and substituted a new answer, which, besides traversing generally the allegations of the petition, sets up five special defenses. To each one of these a demurrer was interposed and sustained by the court. Abiding the same, the defendant now insists that the first and third of the special pleas are good and sufficient in law, and should have been upheld. In its essence, the ground of the first is, failure of consideration; that of the other, a subsequent rescission of the contract of subscription between the railroad company and the defendant.
"We need not add that, before determining this case, we could have had this omission supplied by a rule upon the clerk, had it been deemed important or necessary. But it is suggested to the appellant, that after this court had passed upon the merits of said equitable defense, and held the same to be insufficient, whether, under the facts submitted, it was not irregular and out of place to have insisted upon a second hearing of a matter already res adjudicata; and hence to have brought it up a second time would also have been quite as much out of place as his argument is in its absence.
But upon the record, as we now have it, there are other
The ground of the demurrer to the above plea is, that it is bad,- because it cannot be sustained without introducing evidence- to vary and contradict the written contract of subscription. But it is claimed that the defense is failure of consideration, and that this, like the recital of facts, dates, &c., may usually be shown as falling without the range of the operation- of the rule, which excludes parol evidence of facts, contradicting, varying or adding to that which is-contained in the written contract. This is true,
The defendant, in this case, sets up the facts and circumstances which constitute the consideration for which he claims that he agreed to subscribe the $1,000, and upon the failure of which he now insists. But it may well be asked, whether this 'defense in its facts and circumstances is not substantially the same, by another name, as the equitable defense heretofore plead, and which this court ruled against the defendant. We are inclined to think so, and concluded to allow the order sustaining the demurrer to the same to stand.
If there were creditors at the time, and the possession assumed by the demurrer a valid one, the plaintiffs could avail themselves of it on the trial, under our present rules of practice, to the same extent, as if they had replied the facts in avoidance of the legal effect of the cancellation and release under the former practice. It will be time enough for the courts to take care of the rights of creditors, when they are judicially advised by the pleadings or evidence in the cause, that the same are in jeopardy.
As respects the assent of the stockholders to make the rescission of the contract valid, this is necessarily implied in the language of the plea. The allegation is, that it was the company that canceled the contract, and released the defendant. Who, in law, constitutes the company, if it be not the stockholders ? The distinction which the demur-rant would make between them, derives no support from the authorities cited.
Again, a release is a contract, and the articles of incorporation give to this company all the powers described in section 674 of the Code of 1851. The sixth clause of that section invests the company with power to make contracts, acquire and transfer property, possessing the same powers in such respects as private individuals now enjoy.
There was no lack of power, therefore, in the company, nor do we think there would have been in the board of directors, to rescind the contract with or without the consent of the stockholders or others, when it was done in good faith, and under the peculiar and equitable circumstances of the case.
Reversed.