text:
    Bailey, Administrator, &c., v. Hollister, Administratrix, &c.
    A member of a corporation, whose charter the legislature has reserved the power to repeal or modify, holds his stock subject to such liability as may attach to him in consequence of an extension or renewal of the charter, without his application or consent.

      Held, accordingly, that the estate of an intestate succeeded to the individual liability imposed on him as a stockholder in a corporation whose charter would have expired, but was extended after his death, by such act of extension, and his administrator is liable for debts of the corporation contracted after the death of the intestate.
    The stockholder or his.personal representative can, it seems, reheve himself only by selling the stock.
    Whether, when the charter has actually expired, the original stockholder may, without his assent, be continued as a corporator, quaere.

      Appeal from the Supreme Court. The cause was tried before a referee, who found these facts: In January, 1854, Bailey recovered a judgment against the Oriskany Manufacturing. Company, for $706.46, upon an indebtedness which arose in the years 1849, 1850,1851,1852, and 1853. Execution on the judgment having been returned unsatisfied, this action was brought to recover the same debt from the defendant, as administratrix, on the ground that, when the debt was contracted, the estate of Kirkpatrick, the intestate, was a stockholder, and as such, personally liable under the charter of the Company. Kirkpatrick died in September, 1832, being then the owner of ten shares of the stock, of the par value of $550. The defendant was appointed administratrix October 11,1832.
    The Oriskany Company was originally chartered Eebruary 16, 1811. (Laws of 1811, p. 97, § 2.) That charter contained a clause declaring the persons who should be stockholders at the time of dissolution liable for the debts of the Company. The prescribed duration of the charter was fifteen years. Kirkpatrick, the intestate, did not become a stockholder under that charter, which expired Eebruary 26,1826. The charter, having expired, was renewed or revived by an act passed April 16, 1826, for five years longer. The second section of this act provided that the stockholders should be jointly and severally liable in their individual capacities, to. the amount of their stock, 'for any debt thereafter contracted, provided that no stockholder-should be prosecuted until after suit and judgment and execution against the directors, “ to the end that the stockholders who were directors when any debt or demand was created shall be liable in the first instance.”. (Laws of 1826, p. 242.) While this act was in force, to wit, July 2Ó, 1827, Kirkpatrick became the owner of the stock in question and he remained the owner until his death in 1832. He was never a director. The fifth and last section of the act is in these words: “ The legislature may at any time suspend or repeal this act at its pleasure, and may at any time alter or modify the same, either in respect to the corporate rights and privileges of the Company, or as to the . rights and privileges of the stockholders generally.”

      Before the act of 1826 expired, and before the death of Kirkpatrick, and while he was a stockholder, to wit, April 29,1829, the legislature passed another act, which continued for fifteen years longer the original act of 1811, and repealed the renewing act of 1826, and subjected the corporation to the provisions of title 3, chapter 18, part first of the Revised Statutes. By these Statutes, the charter of every corporation is subject to' “ alteration, suspension or repeal” by the legislature. (1 R. S., p. 600, § 8.) Under the act of 1829, the charter expired April 29, 1844.
    . On the 16th of March, 1844, the legislature passed ánother act. The first section reduced the capital stock: the second declared the stockholders liable in their individual capacity for the debts, “ to be recovered of the stockholder who is such when the debt is contracted,” but no suit to be brought until after judgment and execution against the corporation. The third section declared that the indebtedness of the Company should never exceed the amount of its capital. The fourth section declared the charter to be extended for fifteen years from the passage of the act. (Laws of 1844, p. 34.)
    The indebtedness in question accrued, as above stated, in the years 1849, &c., while the act of 1844 was in force, and long after the charter under which Kirkpatrick had become a stockholder had expired. Kirkpatrick had died, as before stated, in 1832. The question, therefore, was, whether the defendant, in the character of representative, became a stockholder under the act of 1844, and in that character became liable for the ■ debts of the Company. On the books of the Company the stock stood in the name of Kirkpatrick, until 1844. It was then entered in a new stock ledger in the name of “ the estate of William Kirkpatrick.”
    The referee found that, after Kirkpatrick’s death, and as late as 1850, the defendant, as administratrix, received dividends on the stock in question. The referee decided against the defendant, and directed judgment for $608.81, which was affirmed in the Supreme Court. The defendant appealed to this court.

      George F. Comstock, for the appellant,
    argued that an administrator cannot bind the estate by an agreement to take stock in a corporation. Conceding that the receipt of dividends by the administratrix may estop the defendant from denying that she had consented to come in under the renewed charter of 1844, and hold the stock with the liability which it imposes, such consent may affect her personally, but does not affect her in her representative capacity.
    Consent or agreement being out of the question, the inquiry is whether the act of 1844, by its own inherent force, compelled the estate or representative of Kirkpatrick to be a stockholder. We deny, 1st, that the legislature, in renewing a charter, has the power to prevent any stockholder from exercising his choice to be or not to be a' stockholder after the expiration of the charter under which he held his shares; 2d, that the legislature ever intended to take away that choice. The power to “ alter, suspend or repeal,” reserved in the original charter, has reference only to the relations between the corporators and the public or the State, not to the relations between the shareholder and the corporation itself, which are in the nature of a contract, and protected from any legislative interference by the Federal Constitution. An act to revive and continue an expired or expiring charter is not within this power. It is a simple exercise of the original creative power of the legislature —identical with the power to grant charters and create corporations—valid without any reservation in a previous charter. The power claimed in this case to continue one as a stockholder in an expiring corporation cannot be distinguished in substance from a power to make one take stock in a new corporation independent of his volition. Original charters only offer corporate privileges to those who voluntarily elect to be shareholders ; and acts which renew expiring charters only make the offer to those who are willing and elect to accept the favor and continue their investments. (15 B. Munr., 341; 2 Mass., 269; 2 Conn., 578.) Corporations can always take a surrender of stock; give up to the shareholder surrendering his proportion of the capital; and re-issue the same stock to any one who will replace the capital. (Columbus City Bank v. Bruce, 17 N. Y., 507.)

      Charles A. Doolittle, for the respondent.
   Gould, J.

It will be conceded that when a stockholder in any corporation dies', his estate succeeds him in the title to, and the rights in, the stock he- held. Of necessity, it must take that title and those rights subject to any liability 'then existing upon them; and so long as the estate is, by operation of law, the holder of such stock, the estate must become responsible for any obligations accruing during that time, which the law may impose upon any holder of the stock, as such. Such liability proceeds not from any new contract, made by or on behalf of the estate; but is inherent in the property itself. To avoid it the estate must part from the property; must cease to be the holder of the stock. Or, calling it a contract liability, it arises out of a contract made by the stockholder, and binding his personal representatives as it bound Mm, as long as the relation of stockholder existed.

The stock in the case before us was owned by Kirkpatrick, in a company whose charter the legislature had the power to alter, amend or repeal; and by that charter the corporation was to exist until April, 1844. And although Kirkpatrick died in 1832, there can be no doubt that, if his estate continued to hold the stock for the residue of the time the charter had to run, the estate would be liable to any and all the incidents wMch, during that time, might attach to the stock; and (according to th.e decision in the case of the Oliver Lee & Co.’s Bank) to any liabilities which the legislature might attach to the same stock and its holder during the same time, as the stockholder’s assent is not necessary to the attaching of the liability; and attaching it by law, without his assent, is not in violation of the Constitution of the United States. Under the decisions, it seems difficult for a stockholder, or his estate after him, to avoid the effect of any form of legislative action which has yet been had in regard to corporations. Unless his dissent is expressed by selling his stock, the law assents for him. And whatever might be true where a charter had actually expired before an act to continue or renew it had been passed, it cannot be said that extending the life of a corporation (with all its organization in full operation) is anything more than extending a liability, from which any stockholder may free himself by a sale of his rights and interest. This, if the corporation be solvent, he can do. If it be insolvent, the law affords the means of winding it up ahd stopping additional liability. Beyond this, it can afford him no protection against the acts of those with whom he voluntarily became an associate.

The judgment of the Supreme Court should be affirmed.

Wright, Sutherland, Allen and Smith, Js., .concurring.

Judgment affirmed.


source: Caselaw Access Project

author: Selden, J. Allen, J., (dissenting.)

license: Public Domain

text:
    White, Receiver, &c., v. Madison
    The power of an agent to insure the property of his principal, does not authorize an insurance in a mutual company which would make the principal an insurer of others.
    A sheriff who has goods in Ms custody under process has a special property which gives him an insurable interest, and his deputy, as such, without special power is authorized to insure in the name and behalf of his principal.
    Whether the expense of effecting insurance maybe charged, except under special statutory provisions, by the sheriff as a part of the cost of taking care of the property, or is to be borne by Mmself, qwzre.

    The principle upon which one making a contract in behalf of another without authority is to be held liable, discussed by Semen, 3".
    His liability rests on the ground that he warrants Ms authority, and not that the contract is to be deemed his own.
    The damages to wMch the professed agent subjects Mmself are measured, not by the contract, but by the injury resulting from Ms want of power, and include, e. g., the costs of an unsuccessful action against the alleged principal to enforce the contract.
    A deputy sheriff having insured goods in Ms custody in a mutual company without authority, giving for the premium a note in the name of Ms principal, the insurers bear the risk until the sheriff repudiates the undertaking of his deputy, and this risk on their part is a sufficient consideration to support their action against'the deputy.
    A complaint stating all the facts will support a recovery on the ground of warranty, though that be not specifically stated as the basis of the claim, and the recovery was allowed in the court below as upon the note.
    In such an action, -parol evidence of the ground on which the plaintiff was nonsuited in a former action against the sheriff is admissible to rebut a possible inference that it was granted for some formal defect, the consequences of which the plaintiff ought himself to bear.
    Appeal from the Supreme Co'urt. Action by the receiver of the Union Insurance Company (a mutual company, organized. under the act of April 10, 1849), to recover the amount of a promissory note, alleged to have been executed by the defendant, in the name of H. D. Snow, without authority, of which note the following is a copy:
    “ $105. For value received in policy Ho. 5405, dated July 15, 1852, issued by the Union Insurance Company, at Fort Plain, N. Y., I promise to pay to the said company, or their treasurer for the time being, the sum of one hundred and five dollars, in such portions, and at such time or times, as the directors of said company may, agreeably to their act of incorporation, require. N. D. Snow, Sh’ff Chau. Co., By A. Z. Madison, Dep. Sh’ff.
    The plaintiff also claimed to recover the costs of a prior action upon the same note, which he had prosecuted unsuccessfully against Snow; the substance of the proceedings in that action being set forth in the complaint.
    The defendant, by his answer, traversed the facts stated in the complaint, except the- making of the note and application by him, alleging that he made the note by his official au- . thority, as 'the deputy of the sheriff, A. D. Snow, and not otherwise, “for the purpose of procuring an insurance upon goods and chattels that he had seized by due process of law, as such deputy sheriff, and held in custody by virtue of his office, all of which the company well knew; and with full knowledge that neither Snow nor the defendant could be made liable to pay the note, they issued their policy to insure the property so seized and heldand he insisted that the note and policy were void.
    At the time of the execution of the note, the defendant was a deputy of A. D. Snow, then sheriff of Chautauqua county, and as such deputy had seized at Dunkirk, in that county, by virtue of an attachment, goods then in transitu from New York to Indiana. Pending a controversy as to the ownership of the goods, the defendant (being at the time agent of said insurance company), made an application on behalf of the sheriff to have -the goods insured by said company against loss by fire. The material part of the application was in the following words:
    “ Application of Noah D. Snow, sheriff of Chautauqua county, by A. Z. Madison, deputy sheriff, of Fredonia, in the county of Chautauqua, N. Y., for insurance against fire by the Union Insurance Company at Fort Plain, N. Y., for the sum of seven hundred dollars, for the term of one year, to wit, on a certain lot of merchandise " (describing it), “ the same having been seized by said sheriff, per said deputy, by virtue of a warrant of attachment, and stored in the warehouse of F. French & Co., at the foot of Centre street, Dunkirk, N. Y., for $700—estimated value, $1,000.” At the foot of the application, which contained other statements not now material, was the signature, as follows:
    “ N. D. Snow, Sheriff Chau. Co.,
    By A. Z. Madison, Deputy, applicant.
    ' “ A. Z. Madison, Agent.”
    At the foot of the application, on the same sheet, was the premium note, which was made by thé defendant and sent to the company with the application. A policy was issued by the company, pursuant to the application, to “N. D. Snow,* sheriff,” by which the company agreed to insure the said sheriff and his successors in office against loss or damage by fire of said goods, describing them, and the sheriff’s interest therein, in the words of the application, to an amount not exceeding $700, for one year from July 15, Í852.

      The note was assessed as against H. D. Snow, sheriff, to its fall amount, to pay losses which accrued while the policy purported to be in force, and notice of the assessment was given to him only.
    On the trial the plaintiff gave in evidence the charter of the company,' and the various proceedings by which he was constituted receiver, which were severally objected to by the defendant’s counsel, on the ground that he was not a member of the company or a party to the proceedings. The objections were overruled, and the defendant’s counsel excepted.
    The judgment-roll in the prior action against Snow, showing that the plaintiff was nonsuited and judgment rendered against him for $25.34 costs, was also admitted in evidence by the judge; to which the defendant’s counsel excepted. It was proved that on the trial of that action the present defendant testified that he made the application and the note, but that he had no authority, from the sheriff to do so. It was also proved that the nonsuit was ordered by the judge on the ground that Madison had no authority from the sheriff to make the note. To this testimony there was an exception, on the ground that it was irrelevant and illegal.
    The policy was introduced, and upon it were the following indorsements, admitted to have been written and signed by the defendant, except the cancellation, which was in the handwriting of the secretary of the Company:
    “ To the Directors of the Union Insurance Company: Cent. —Having lost a portion of the goods insured by the within policy, by a sort of marine disaster in the storm of Hov. 12, and sold the balance for $380.11 in a damaged condition, I hereby surrender said policy in whole, and request my premium note cancelled. Ho AH D.’ Show, late Sheriff, By A. Z. Mahisom, his Deputy.
    Fredonia, Feb. 10, 1853.”
    “ I suppose there must be an- assessment on note, hope it will not be very large, as I sold the goods the middle of January, and forgot till now about this ins. I shall expect to pay the assessment, however, as you shall say is right, less unex’d prem. A. Z. Madison."
    “ Cancelled Feb. 10, 1853-4.”
    In April, 1853, the defendant paid an assessment of $8.40 upon the note. He testified that he had no authority to sign the note and application, other than that Of deputy sheriff; that when he signed them, he believed he had power thus to bind the sheriff. It did not appear that Snow ever received the policy, or knew of its existence prior to the time of its ■ surrender.
    On these facts a nonsuit was asked for by the defendant’s counsel, on substantially the following grounds:
    1. That the complaint sought to charge the defendant as maker of the note: that there was no proof that he was in fact such maker, or that any party considered him such.
    2. That the rule of law holding an agent personally liable when he contracts without authority does not apply where _ there is no fraud, misrepresentation or bad faith on his part: that in this case the defendant in good faith disclosed all the facts within his knowledge in regard to his authority, and the contract was the result of mutual misapprehension of the law as to the power of a deputy sheriff to bind the sheriff.
    3. That the law authorizes an action upon a premium note only against a member of the company, and then only after an assessment against him, notice of the same and demand of payment, neither of which facts nor conditions exist in this case.
    4. The note was without consideration and void; because, 1st, the application and note purport to be made by the sheriff in his official capacity, and the policy was issued to him in the same capacity, when in fact he had no power as sheriff to insure (if he had, then the deputy had power to and did bind him by the act in question): 2d, the policy was void, because there was no application or premium note of the sheriff to whom the policy was issued: 3d, the company was insolvent at the time of issuing the policy.

      5. The note was void for the reason that, in giving it, the defendant acted, as the deputy and in behalf of the sheriff, and in accepting and transmitting it to the company he acted as agent of the company.
    The court denied the motion, and directed a verdict for the plaintiff for the amount of the assessment and interest; to which rulings the defendant’s counsel excepted. The judgment entered in pursuance of the verdict was affirmed at the general term of the Supreme Court, and the defendant brought this appeal.

      John Wait, for the appellant.

      Henry R. Mygatt, for the respondent.
   Selden, J.

It was proved on the trial in this case that the defendant, on the trial of the former action against the sheriff, testified that he had no authority from the sheriff to execute "in his name the note mentioned in the complaint, unless that" authority was within his general powers as a deputy of the sheriff; and the counsel on both sides have assumed that he had, as deputy, no such authority. It seems also to have been assumed that the sheriff had no power to insure, in his official capacity, the goods attached, and that consequently the deputy could not insure them in his name. The question of power on the part of the deputy to execute the note in the name of the sheriff does not depend upon that position. If the deputy had power to insure in the name of the sheriff, he could not, in effecting such insurance, subject the sheriff to the hazards of that most unsafe of partnerships—a mutual insurance company. He may have had power to insure the sheriff’s goods, without having power to make him the insurer of other people’s goods. The latter power was attempted to be exercised when he made the note in question, and this was undoubtedly beyond his general authority.

The defendant, having executed the note in the name of Snow, without authority, would be held liable, according to several decisions in this State, as the maker of the note (Dusenbury v. Ellis, 3 John. Cases, 70; White v. Skinner, 13 John., 307; Feeter v. Heath, 11 Wend., 487; Rossiter v. Rossiter, 8 id., 494; Meech v. Smith, 7 id., 315; Palmer v. Stephens, 1 Denio, 480; Plumb v. Milk, 19 Barb., 74.) The authority of these cases has been somewhat shaken by the remarks of the judges who. delivered opinions in the case of Walker v. The Bank of The State of New York (5 Seld., 582); and in England, as well as in several of the United States, the principle upon which they rest, if they are supposed to present the only ground of liability of the agent, has been substantially 1 repudiated, (Collen v. Wright, 40 Eng. L. & Eq., 182; Randell v. Trimen, 37 id., 275; Lewis v. Nicholson, 12 id., 430; Smout v. Ilbery, 10 M. & W., 1; Polhill v. Water, 3 B. & Ad., 114; Jenkins v. Hutchinson, 13 Ad. & Ellis, N. S., 744; Long v. Colburn, 11 Mass., 96; Ballou v. Talbot, 16 id., 461; Jefts v. York, 4 Cush., 371; S. C., 10 id., 392; Abbey v. Chase, 6 id., 54; Stetson v. Patter, 2 Greenl., 359; Bank v. Flanders, 4 N. H., 239; Woodes v. Dennett, 9 id., 55; Johnson v. Smith, 21 Conn., 627; Ogden v. Raymond, 22 id., 379; Taylor v. Shelton, 30 id., 122; Hopkins v. Mehaffy, 11 S. & R., 126; 2 Smith’s Leading Cases, 222; Story on Agency, §264, a, and note 1.)

If it were necessary, in disposing of the present case, to decide the question, whether, as a general principle, one entering into a contract in the name of another, without authority, is to be himself holden as a party to the contract, I should ,, hesitate to affirm such a principle. By that rule courts would '. often make contracts for parties which neither intended nor , would have consented to make. The contract, if binding >* upon one party, must be binding upon both; and where burdensome conditions precedent were to be performed by the party contracting with the assumed agent, before performance could be demanded of the other party; or where the agent ' should undertake to sell, lease or mortgage the property of the assumed principal, or where credit should be given, which the responsibility of the agent would not justify, great injustice might result from such a rule. In those cases, and I think in all cases; where one, pretending to be an agent, has contracted as such without authority from the principal, the party contracted .with, on learning the facts, must have the right to repudiate the contract, and to hold the assumed agent immediately responsible for .damages, without waiting for the time when an action might be maintained on the contract itself; and the damages must be measured, not by the contract, but by the injury resulting from the agent’s want of power.' | Whenever a person enters into a contract as agent for another, | he warrants his own authority, unless very special circum- | stances, or express agreement, relieve him from that responsiI bility. (Smout v. Ilbery, 10 M. & W., 9, 10; Polhill v. Walter, 3 B. & Ad., 114; Jenkins v. Hutchinson, 13 Ad. & Ellis, N. S., 744; Jefts v, York, 10 Cush., 395; 5 Seld., 585; Story on Agency, § 164.) An action upon such warranty must always be appropriate where personal liability attaches to an agent, in consequen^ of his contracting without authority. In such action the plaintiff would be relieved from the necessity of showing performance of conditions precedent, and from the delay which the terms of the contract might require, if the remedy were • limited to an action on the contract; and if special damages should be incurred in consequence of the agent’s failure to bind his principal, such as the costs of an unsuccessful action against the principal to enforce the contract, they might be recovered. If the act of the agent were /fraudulent, an action for the deceit would lie, but it would be / a concurrent remedy with an action on the warranty,- and so I J apprehend must be the action on the contract itself, if the cases / which sustain such action are to be regarded as correctly decided. In Dusenbury v. Ellis (3 John. Cases, 70), the leading case in this State sustaining such an action, it does not appear what time the note executed by the assumed agent had to run at the time when it was given. Supposing it to' have been given payable at a very distant day, was the holder, after discovering that Dusenbury had no authority from Sharpe (the assumed principal), -to give it, bound to wait until the note bécame due, and then sue Dusenbury on the note as - his contract; or could he repudiate the contract and immediately sue Dusenbury on the warranty of authority, implied, or rather, as I think, expressed, in the execution of the note ? There can be but one answer to this question, and that is in favor of the right to repudiate the principal contract, and to prosecute on the subordinate contract of warranty, whether the right to elect between «that course, and an action on the principal contract, existed or not. Whether Ellis, as indorsee of the note, could have maintained an action on the warranty, which was made originally to Fish, the payee, may be doubtful, unless it appeared that the agent knew he was acting without authority, in which case, according to English decisions, he would be liable on the warranty to any one receiving the paper; the representation of his authority being in effect made to all to whom it might be offered in the course of circulation. (Polhill v. Walter, 3 B. & Ad., 114.)

If the party receiving the note in the present case must be charged, as claimed by the defendant’s counsel, with knowledge of the extent of defendant’s ordinary powers-as a deputy of the sheriff (which is very questionable), the want of special authority for this particular act was not communicated, and could not be known. The defendant, therefore, is not within the cases in which agents have been held excused from liability for acts beyond their authority, when they have acted in good faith and the facts affecting their authority were equally well known to both parties. (Smout v. Ilbery, 10 M. & W., 11; Story on Agency, §§ 265, 265 a.)

The recovery seems to have proceeded, in the court below, upon the ground that this was an action. upon the note. It is rather, I think, to be regarded as an action on the warranty. The complaint states all the. facts in respect to the making of the note by the defendant in the name of Snow; that he executed it without authority, and that the company issued the policy upon no other consideration than the note and the advance premium, relying on the authority of the defendant to execute the note. It also sets forth the proceedings in an unsuccessful suit against Snow on the note, and demands judgment for the costs of that suit, together with the full amount of the note; the assessments for losses being equal to that amount. On the facts stated, the law implies a warranty of authority to the defendant to execute the note for Snow, and it was unnecessary, under our present system o'f pleading, to allege that legal inference. (Eno v. Woodworth, 4 Comst., 249, 253.) In an action on the note as the contract of the defendant, a claim for the costs of a suit to enforce the note against Snow would be absurd. The amount of the note, less the assessment paid, was made the measure of damages, as if the action had been upon the note; but the allegations and proof showed that the share of the losses of the company, chargeable upon the note, during the time covered by the policy prior to its surrender, was equal to the amount of the note. That possibly might be regarded as a proper measure of damages upon the breach of warranty; but whether that be so or not, no question having been made before the jury as to the amount of the recovery, if-the defendant was liable at all, none can be made now.

I think the sheriff had an insurable interest in the goods, and that the policy was valid. The sheriff, by the seizure on the attachment, acquired a special property in the goods, which would have enabled Mm to maintain an action, and to recover their full value against any one who should take them out of his custody. (2 Saund., 47, note 1; Story on Bailm., § 125; 2 Mass., 514; 3 Hill, 215.) Such special property gave him an insurable interest. It was his duty to keep the property safely until sold or released, and he was chargeable for its destruction by any cause against which he could protect it by ordinary care, if he was not subject to a more stringent rule-of responsibility. (5 Hill, 588; 21 N. Y., 103.) Although he was under no obligation to insure, he could, if he chose, protect himself against this risk by insurance. “A bailee or depositary, being liable by law or by contract for certain risks whereby the subjects bailed or deposited may be damaged or lost, has an insurable interest in it in respect to such risks.” (1 Phil. on Ins., 4th ed., p. 121, § 191.) “ A man is interested in a thing to whom advantage may arise, or prejudice happen, from the circumstances that may attend it, * * and whom it importeth that its condition as to safety or other quality should continue.” (2 New. Rep., 302; 1 Hall, 84, 102, 183.)

The policy having been obtained in the name of the sheriff, he had a right to ratify it át any time during the term of insurance (2 M. & S., 485; Story on Agency, § 248); although doubtless by doing so he would have ratified the giving of the note by the defendant, and made himself liable upon it. The section of Story on Agency, above refered to, shows that the underwriters bear the risk- in such cases until there is a disavowal by the principal. This risk formed a consideration for the undertaking of the defendant, sufficient to sustain the recovery, either upon the note or the warranty, and to the extent of that recovery, neither party having, asked the court to submit the question of damages to the jury. The position of the defendant’s counsel is doubtless correct; that if the sheriff was authorized to insure the goods, the deputy who seized them might insure them in his name, but this power, for the reasons given above, did not authorizé the deputy to give the note in question.

It is unnecessary to determine whether the expenses of insurance would constitute a claim in favor of the sheriff against the parties, or either of them, against the property. If the attachment was issued under the provisions of chapter 5, part 2 of the Revised Statutes (2 R. S., p. 3), it would doubtless be competent for the officer by whom the attachment was issued to allow such claim (Laws of 1830, p. 400, § 56; 3 R. S., 3d ed., p. 925); but, without some special provision of statute on the subject, it is presumed that the claim of the sheriff for seizing and holding goods by virtue of attachments or executions, must be limited to the specific fees provided for the service of such process, without reference to the expenses to' which he might be subjected in removing them to a place of reasonable security, if their position were hazardous, or in such care of them as the law requires from him (21 N. Y., 103); whether he should choose to remove them, or to bestow such care, or to protect himself against the possible consequences of neglect, by insurance. (15 Wend., 44; 2 T. R., 148-158; 7 M. & W., 413; 11 id., 620; 12 id., 31; 14 id., 802; Crocker on Sheriffs, §§ 1096, 1097, 1110, 1111; Sewell on Sheriffs, 252-480, 481.)

It w$s within the powers of the company to issue the policy to Snow, and to take security or receive the premium from the defendant, and to prosecute the defendant for any default in performing his engagements. The provision in the statute authorizing the corporation to maintain suits against members or stockholders (Laws of 1849, p. 448, § 16), which is supposed by the defendant’s counsel to limit the right of action of such corporation to suits against members or stockholders, was not designed to restrict its power to maintain suits, but to remove a possible doubt as to its right to maintain suits at law against, members and stockholders,- arising from .the quasi partnership character of such companies. By section 17, these corporations are clothed with all the powers of any corporation to maintain suits.

If the action were to be regarded as brought, and the recovery had, upon the note, it might be doubtful whether the judgment could be sustained, because the plaintiff has neither alleged nor proved enough to show to the court that the defendant was in default in paying the note, regarding it as his personal obligation. By the terms of the note, it was payable “ at such time or times as the directors of said company may, agreeably to their act of incorporation, require.” The act of incorporation here referred to is the charter of the company which the statute requires the original corporators to make and file in the office of the Secretary of State. (Laws of 1849, ch. 308, §§ 3, 10, 12, 16.) There does not seem to be anything in the statute under which the company was organized to which the reference could be held applicable. Neither the pleadings nor the proofs show what the provisions of the charter of the Union-Insurance Company were, and consequently it does »not appear whether the maker of the note was in default or not. The allegations in the complaint of notice of assessment by publication and by mail -are put in issue by the answer; and if we could assume that those allegations indicated correctly what was required by the charter to charge the parties assessed, there is an entire-want of proof on the subject. This objection is' distinctly presented by the third ground of the defendant’s motion for a nonsuit; and if the plaintiff was confined to a recovery on the note, I think this objection would be fatal to his action; but, regarding the liability as depending on the warranty, no assessment or notice was necessary.

Several objections were taken by the defendant to the introduction of testimony; but, with the exception of those relating to the action against Snow, they are so clearly untenable as not to require notice. If this action was to be regarded as an action simply to charge the defendant as the maker of the note, the record in the case of Snow would not have been admissible against the defendant. Assuming that it was incumbent upon the plaintiff to show that the defendant was not authorized to make the note for Snow (19 Barb., 74), this record, to which the defendant was a stranger, was not admissible to prove that fact, or as having any tendency to prove it, though it might have been otherwise if seasonable notice had been given to the defendant that his authority to make the note for Snow was denied in that suit, and requiring him to maintain his authority on the trial. (2 Cow. & Hill’s Notes, 817.) If the record was inadmissible, the parol evidence of the grounds on which the decision proceeded was equally so. Nor was the record necessary to authorize the introduction of proof of what the defendant testified to on that trial, showing his want of authority. What he said in the witness-box was admissible against him, as declarations made at any other time would be, without reference to his oath or to the issues in the record. But, resting the plaintiff’s right of recovery, as I do, upon the warranty, the record was admissible to show that the plaintiff had been subjected to the expenses of an action in attempting to enforce the contract against the principal, whom the defendant undertook to bind. These expenses—the action being brought in good faith—were a legitimate item of damages in the present action (Randell v. Trimen, 37 L. & E., 275; S. C., 86 Eng. C. L., 786; Collen v. Wright, 40 L. & E., 182); and the parol evidence was admissible to rebnt a possible inference 'that the nonsuit was granted on account of some formal defect in the prosecution of the action. It is always competent to show by parol the grounds on which a verdict or judgment was rendered, when the grounds become material, and do not appear in the record. (Wood v. Jackson, 8 Wend., 10-45; Doty v. Brown, 4 Comst., 71-75.) The judgment should be affirmed.

Denio, Ch. J., Davies, Wright and Gould, Js., concurred.

Allen, J., (dissenting.)

One defence relied upon is, a want of consideration for the note in suit. The objection is somewhat obscure, in the form in which it was taken upon the trial, to wit, that the sheriff had no power to effect the insurance, and therefore the policy and note were both void. This objection, which was urged as one of the grounds for a non-suit, . is only another form of alleging a want of insurable interest in the subject insured in the sheriff. The application was in behalf of the sheriff, as such, for an insurance upon property in the custody of the law, under his seizure, as sheriff, by virtue of an attachment; and the policy was issued to him, as sheriff, and his successors in office, describing the property as in the custody of the law under such seizure. The learned court below bestow but little attention upon this branch of the case; merely saying that, although the sheriff may not have been bound to insure the goods—which was not the business .of the insurance company—he had the right to get them insured, and the defendant must therefore respond for the sheriff, in whose behalf he assumed to act. This takes for granted an insurable interest in the sheriff; for, without such interest, he had no power to effect the insurance. The substance of the objection below was, that, as sheriff, he had no such interest in the goods as authorized him to obtain an insurance upon them for his indemnity, as sheriff; and the objection was overruled at circuit, and the ruling at circuit sustained at genera] term.' The objection of a want of capacity in the sheriff to insure the merchandise can refer to nothing but the interest, of the sheriff, qua sheriff, in the goods. It is not disputed that, if the policy was void, ah initio, for illegality, or for the want of an insurable interest in the insured, apparent upon the face of the application and the policy, so that no risk attached, and the insurance company never became bound as insurers, there Was no consideration for the note, and no recovery can be had. A consideration is necessary to support any contract, and, if without consideration, it is treated as nudum pactum ; and as between the original parties, the consideration of promissory notes may be inquired into to the same extent as in other contracts. The consideration of this note was the undertaking of the insurance company to indemnify the individual named in the policy against loss or damage by fire on the goods insured. If that undertaking was void or never attached, and the policy was as no policy, imposing no liability or risk upon the company, and conferring no benefit and securing no indemnity to any party, the note given in consideration of it necessarily falls for want of a consideration to support it. The sheriff, as such, had no right to insure the property for the benefit of, and as trustee for, the parties to the action. The premium would not have been chargeable as a disbursement in the execution of the process or the preservation of the goods. His duty was special in respect to the property attached, involving only ordinary care in its safe keeping. He was not an insurer of the property, nor in any sense a trustee charged with any duty other than that of custodian under the process—the property being in the custody of the law.

Had the property been destroyed by fire without the fault or neglect of the sheriff or his agents, the sheriff would not be liable either, to the general owner or to the plaintiff in the attachment. For a casual destruction by fire of property thus held by the. sheriff, he is not chargeable. (Browning v. Hanford, 5 Hill, 588, and cases cited, by Cowen, J.) The sheriff can only be charged for property lost while in his custody when such loss is occasioned by his neglect or misfeasance. The sheriff not being accountable for property destroyed by fire without his act or default, it would seem to follow that he would not be liable to account for any insurance that he might have effected against such loss. He could only be called to account officially for the property, and not in respect to any contract made concerning it outside of his official duty. The parties to the suit ought not certainly to be entitled to the benefit of a contract not made in their name or at their expense, and to which they were not parties either by name or by reason of having authorized it or contributed to its consideration. It is not, however, necessary to decide what would have been the liabilities of the sheriff in case the property had been lost by the peril insured against, and the company had paid the loss to him. It is sufficient that the sheriff had no authority, qua sheriff, for the benefit and at the expense of the parties whom it might concern, to insure the property. The general owners had an insurable interest in the property, notwithstanding the attachment. The attachment or arrest of goods or other subject, at the suit of a creditor, on mesne process, or seizure on execution to satisfy a judgment, does not deprive the owner of his interest, or diminish it as an insurable interest, until a legal sale is made. (1 Phil. on Ins., § 193; Franklin Ins. Co. v. Findlay, 6 Wheat., 483.) So the creditor, perhaps, might have insured his interest, as having a special lien thereon. (1 Phil. on Ins., § 292; Wells v. Phil. Ins. Co., 9 S. & R, 103.) But the sheriff was in no sense the agent or trustee for either, for the purpose of insurance. His duty was official and special, and his authority limited by the process and the law under which he acted. Officers of courts having the custody of property are regarded as upon the same footing, in many respects, as bailees for hire; and such a bailee would have no authority to insure in his own name or otherwise for the benefit of the bailor. (Story on Bailm., §§ 130, 620.)

The contract of insurance, then, not being authorized for the benefit of the parties to the suit, or valid as made in their behalf, the only remaining question is, whether the sheriff, as such, had an interest in the goods, which he might insure for his own benefit.

It is essential to every contract of insurance that the assured have an interest "at risk. If he has nothing at risk, and can sustain no loss, there is nothing against which the insurer can agree to indemnify him. (1 Phil. on Ins., § 172.) The interest of the assured may be a general or special property in the subj ect insured, or it may be incidental to it. A general owner ; a mortgagee; a creditor, having a lien; a consignee, factor or agent, having a lien on goods for advances; a commission merchant, entitled to commissions on sales, or other person, having possession under a contract that may afford him a profit or emolument, has an insurable interest, and each, to the amount of his particular interest in, or profit which he might make from, the property. (Robinson v. N. Y. Ins. Co., 2 Caines, 357.) The consignee, factor, commission merchant, or supercargo, earning a profit by the sale of the goods, cannot insure the value of the goods, but only to the amount of their respective liens or profits. (Seamans v. Loring, 1 Mason, 127; Wolf v. Horncastle, 1 Bos. & Pul., 316; Russell v. Marine Ins. Co., 1 Wash. C. C., 409.) A bailee or depositary, being liable by law, or by contract, for certain risks of the subjects bailed or deposited, has an insurable interest in respect to such risks. (1 Phil. on Ins., § 191.) A carrier, being himself an insurer, may insure against the risks which he assumes. (Carnley v. Cohen, 3 B. & Ad., 478; Armitage v. Winterbottom, 1 M. & G., 130.) This is only one application of the principle of reinsurance, the right of which is universally acknowledged. But a Sheriff is responsible for no risks to which the property seized is subject, and has, therefore, nothing to insure against, except his own neglect or omission of duty; and the law would not tolerate a contract of indemnity to the sheriff against his own breach of official duty. If the goods were deposited in a proper place, the sheriff’s duty was fully performed; and if the parties to the suit, or claimant, of the property, desired an insurance, they might contract for it, but the sheriff had no interest in its safety which gave him the right to effect an insurance upon it. The want of interest was apparent upon the face of the application and policy. The policy was void, and could not have been enforced if a loss had occurred; and it follows that the note was nudum pattum for the want of consideration, and that the judgment should be reversed and a new trial ordered, costs to abide the event.

Judgment affirmed.


author: Allen, J.

text:
    Seymour v. Sturgess.
    The act (ch. 234 of 1845), in relation to suits against foreign corporations, does not undertake to establish any new liability on the part of stockholders or debtors of such corporations, but only provides for subrogating creditors of the corporation, proceeding against it by attachment in this State, to such rights as the corporation itself, under the local law, or the leo lod contractus, might have enforced against, the stockholder or debtor.
    In an action, therefore, against an alleged debtor of a Maryland corporation, in which no statute of Maryland was proved, affecting his liability, it is to be determined by the common law.
    The corporation being created for the private benefit of its projectors, and not' for any public object, no contract to pay for its stock any further sum than that required upon the original subscription is to be implied from such subscription, or from taking certificates of stock stating the further payments to which the stock might be subjected by order of the directors.
    The effect of such certificate is to give the holder a title conditional upon his making further payments, if called, but leaves such payment optional with him. •
    The by-laws requiring the assent of five directors to a call upon the stockholders ; the facts that the defendant was a director, that no call was made, and that the company became insolvent, when the amount which remained due upon its stock and subject to call was more than sufficient to pay all its debts, do not establish any personal liability against such director.
    The principle upon 'which persons. subscribing or engaging to take stock are held liable, considered, and the cases discussed, by Allen, J.
    The plaintiff filed his bill in the late Court of Chancery as a creditor of the Boston and Mew York Coal Company, a corporation created by the laws of Maryland, to compel the defendant, Sturgess, a stockholder of that company, to pay the balance remaining unpaid upon his stock to the plaintiff, as such creditor, to the amount necessary to satisfy his debt. The cause was transferred for hearing to the Superior Court of the city of New York, and was heard at a general term of that court upon pleadings and proofs, and the bill of complaint dismissed with costs, from which judgment the plaintiff appealed to this court. “ The Boston and New York Coal Company ” became incorporated under an act of the general assembly of the State of Maryland, passed in 1835, by which three persons named Barrell,’Weightman and Monroe, and the persons who should become associated with them, were incorporated for carrying on the manufacture of iron, and opening, working and vending the produce of their land, mines, &e., with power to make by-laws, rules and regulations, and exercise all the rights, &c., usually incident to corporations. The capital was made to consist of 5,000 shares of $100 each, of which the land and services of Barrell, Weightman and Monroe, should constitute a part as might be agreed upon between them, and those who might associate with them and constitute the corporation, by subscriptions payable in money. Power was given to increase the capital to $10,000,000. Provision was made for money subscriptions, and it was enacted that each subscriber should pay, at the time of the subscription, to the commissioners receiving the same, twenty dollars upon each share subscribed, which should give to. them all the rights of stockholders. In July, 1836, the individuals named agreed to accept the charter, convey their lands, &c., to the company, and open books for subscription. In August of the same year the subscription books were opened, and, as was certified by the commissioners, subscriptions received for the 5,000 shares from seven individuals, of whom the commissioners Barrell, Weightman and Monroe, were three; they subscribing for 2,500 shares. It was averred in the bill of complaint that twenty dollars was paid upon each share at the time of subscribing. In November, 1836, the lands mentioned in the charter were offered to those who should become the corporators and stockholders, and between that time and January 31, 1837, sundry individuals agreed to accept the proposition to the amount set opposite their respective names. The aggregate of that amount was $150,000. The proposal recited other subscriptions to the amount of $200,000, and contemplated additional subscriptions to $50,000. The corporation was then organized, and the land became the property of the corporation at the agreed price of $700,000, $200,000 of which was to be secured by the .bonds of the company, and the residue paid to the proprietors in cash and by the assumption of some incumbrances then upon the lands. The bonds for the $200,000 were issued for $1,000 each, payable on the first day of November, 1839, and by the agreement were to contain and did have this clause inserted therein, to wit: “ The officers, directors and stockholders of the company are not liable for its debts in their individual capacities, and this evidence of debt is delivered and accepted upon the understanding and agreement that the obligee and his assigns are to look only for payment of it to the corporation and out of its funds and property, and not to its officers, directors or stockholders.” The plaintiff became the owner and holder of five of these bonds, and the company was unable to pay the obligations at their maturity, and after various schemes for raising the money it was arranged to issue new bonds for the amount in sums of five hundred dollars each, securing the same by a trust upon the corporate funds and property. The trust was created and the new bonds were issued, four of which were accepted by the plaintiff in lieu of those for $1,000 each held by him. The last bond contained this clause: “ This bond, together with three hundred and ninety-nine others of the same amount, making in all two hundred thousand dollars, is secured by a conveyance executed by this company to O. Monroe, Eichard Withers and Charles Desmond, as trustees for real, éstate, consisting of their coal mines and land in the State of Maryland, .valued at seven hundred thousand dollars, and which is thereby pledged for the indemnity of holders of said bonds.” In 1845 the plaintiff commenced proceedings by foreign attachment in the Supreme Court of this State for the collection of the bonds of the corporation, and attached a few account books and papers, which were appraised at $18.25, and in that action thus commenced recovered a judgment, the defendant therein not appearing, for $2,478.43, upon which an execution was returned unsatisfied except as to $1.85. The company, in pursuance of the power given by the charter, enacted by-laws, one of which was to the effect that the directors should have power to make calls for payment upon the stock of the company from time to time not exceeding the par value of the same as fixed by the charter, but that no call should be made unless there should be five affirmative votes in favor thereof, and that the directors might require payment from the stockholders of such calls at such times and in such proportions as such directors should see fit, under pain of the forfeiture of the shares upon which such payments should be required and all former payments thereon. This by-law was adopted at the organization of the company, and with an immaterial alteration in December, 1839, still remained in force. In 1842 calls and payments had been made upon the stock to the amount of sixty-fivé per cent, leaving only thirty-five dollars unpaid upon each share, and certain of the stock had in some way come to be' owned by the corporation, and was sold in different parcels and at different times to the defendant, Sturgess, 200 shares for the sum of $11.75 per share and 170 shares for $4 per share; The terms of the sale were the same, except as to the price, and were expressed in the resolution of the directors authorizing the president to .sell the shares for the sum named, and directing the register of transfers to issue a certificate for the same, filling in the blank in the certificate “ subject to a further payment of thirty-five dollars per share;” and the certificates were issued in that form. About the same time the defendant, Sturgess, purchased of a stockholder one hundred other shares, and upon the surrender of the original certificate a new certificate was issued to him in the same form as for the shares bought of the company. He was a stockholder in virtue of such certificates. Ho call had been made for further his stock and it did not appear that any measures had been taken for the dissolution or winding up the affairs of the corporation. In 1842, and after the purchase of this stock, Sturgess was elected a director of the company, and acted as such at one or two meetings.

      E. H. Owen, for the appellant.

      Daniel Lord, for the respondent.
   Allen, J.

The plaintiff seeks the relief demanded in this case under the law of this State, passed about the time of the recovery of his judgment against “ The Boston and Hew York Coal Company.” (Laws of 1845, ch. 234, p. 256.) The act was designed to facilitate the collection by domestic creditors of debts against foreign corporations, by giving a remedy against their credits and assets within the State. It provides that upon the return of an execution against such corporation, unsatisfied in whole or in part, the creditor may commence a suit against any debtor to the said corporation, against the subscribers to its capital stock; shareholders or stockholders, or any or all of them, and may recover in such suit or suits any sums to the amount due the plaintiff, “ which such defendant or defendants could be liable to pay in any event in the state or government where such corporation is located.” A plaintiff, being a judgment and execution creditor of the corporation, and bringing himself within the terms of the act, must, in order to a recovery under it, establish a present debt and liability to.the corporation from the person sought to, be charged, if, as a stockholder, according to the lex domicilii of the corporation, and if under any other contract, under the lex loci contractus. The law does not assume to declare or create a liability, but undertakes to deal with and dispose of liabilities existing already. It could not create an obligation or vary the terms and conditions of a liability, or of the contract or relation out of which a liability is sought to be established; and when it declares that the parties may be charged with” any sum which they “ could be liable to pay in any event in the state and government where such corporation is located,” it does not mean to charge the stockholders or other creditors in any other form or upon any other conditions, or to any greater extent than he would be charged by the lex loci. If the liability to the foreign corporation depended, by the terms of the contract, upon the performance of a condition precedent, the legislature of this State could not dispense with ór avoid such condition, but the creditor seeking to enforce 'the liability must show its performance, or that its performance has been waived or prevented by the party in interest. Assuming all that can be claimed by the plaintiff in regard to the personal liability of the stockholders to pay to the corporation the nominal or par value, or amount of their respective shares, the liability of Mr. Sturgess in this action is not shown. The liability is that resulting from the implied promise to take and pay for the stock assigned—implied as against the original subscriber from his subscription, or as against the subsequent holder by his accepting the certificate, thereby succeeding to the liabilities-as well as the rights' of the original subscriber. We are at liberty to say that neither by the general statutes of Maryland nor the special charter of “ The Bostón and New York Coal Company ” are subscribers to the shares or subsequent stockholders made personally liable to pay for their stock, or that any liability rests upon them, except the common law liability growing out of their contracts with and relation to the corporation. We have so much of the charter as the plaintiff has seen fit to set out in his complaint, and in it there is nothing to charge the stockholders, and the charter itself was not put in evidence, nor any general law of the State of Maryland upon any subject. The common law, therefore, must determine the liability of the parties. (Holmes v. Boughton, 10 Wend., 75; Thorp v. Hatch, 3 Abb. Pr., 23; 1 Kent Com., 472.) The most that could be implied ■ from a subscription to the capital stock, or an acceptance of a certificate of stock, would be a promise to pay upon request of the promisee (the company), or upon such terms and conditions and at such times as" the company, by its by-laws, had prescribed. The terms of the subscription, if any subscription was in fact made, are not before us, but we have the by-laws, by which it is expressly declared that the stock shall only be subject to call by the directors, and that no call shall at any time be made for payment upon the stock except upon the vote and by the direction of at least five of the directors. Any one becoming a stockholder, as did the defendant, Sturgess, after the enactment of this law, and promising to pay the balance unpaid upon his stock, was entitled to the benefit of this provision. It entered into and made a part of the contract with the company and constituted a material and important modification and condition of the promise. In an action by the company, it would be a good plea in law that no call had been made by the affirmative vote of five directors. The money was only payable upon a demand and notice in a prescribed period by direction of the requisite number of directors. There is no claim that this call and demand have been made, or that the defendant has waived the performance of this condition precedent. There is no allegation that the company has gone into liquidation, and the directors have no power to act, even if such an allegation could aid the plaintiff. The importance of this condition to every stockholder is obvious. It secures a ratable call upon all the stockholders and equalizes the burdens of the company. It also prevents a call except when the .exigencies of the corporation may require it, and if a stockholder casually, in or by chance residing in another State, may be compelled to pay upon any other condition, or without condition, he loses the benefit of this essential provision in his contract, and is made to bear an undue proportion of the burdens of the association.

Upon the allegations and proof as made before us, and without the call from the directors, the defendant could not in any event be made liable to pay to the corporation in Maryland or elsewhere, and if not to the corporation there, not to any one standing in the place of the corporation, either by assignment, succession or act and operation of law; for there is no debt or duty owing to'the corporation which can inure to the benefit of the creditors of the corporation or others. (Savage v. Medbury, 19 N. Y., 32.)

But a firmer and better ground upon which to rest the decision of the case, because less technical, is that there was and is no personal liability on the part of Mr. Sturgiss to pay the thirty-five dollars remaining unpaid upon his stock. I yield to the authority as well as the principles and reasoning of the cases, which hold that in a certain class of corporations, the franchises of which are of a public character, and where the capital may be supposed to have been fixed with a view to the necessities of the corporation, and to enable it to fulfill its dirty to the public and accomplish its proposed end, a subscribing for or agreement to take stock may imply a promise to pay for it, and that each successive taker of the stock takes it cum onere and becomes personally bound for its payment. The promise is implied from the circumstances of the case, the public interest and the terms of the subscription. The cases are governed by the ordinary rules which regulate other transactions, and the law does not, in raising implied promises, arbitrarily make provisions or contracts for parties, but spells out the intent and declares what the parties really undertake—what the actual contract was. In other words, an implied promise is distinguished from an express promise, rather by the mode of proving it than by any intrinsic difference between them. The one is proved by direct evidence, and the other by circumstances and indirectly. Without a promise, proved in one way or the other, a party cannot be charged in assumpsit. If the circumstances negative all presumption of a promise, there is no rule of law applicable to any class of cases which compels courts to disregard the circumstances and adjudge a promise to have been made against the evidence. In the class of cases referred to (actions upon unpaid subscriptions for stock and against assignees of stock not fully paid for), courts have had respect to the terms of the contract and certificate and the circumstances of the case; leaving it for other tribunals, in applying the same principles, to observe and give effect to different circumstances as they may arise, and declare 'what in each case, is the contract or agreement of the parties. The Company was here incorporated not to accomplish a great public object, but for the immediate profit and advantage of its projectors, and to enable them to dispose of their land and mines, and with a view to a development of their resources by those who should associate together in the corporation.,■ Hence the land owned by the corporators named in the charter is made by the law to constitute a part of the capital stock, and it was not deemed necessary for any public purpose, or for the protection of the corporators that any statutory provision should be made for the payment of the capital stock beyond the twenty dollars required to be paid at the time of subscribing,.

It was reasonably supposed that the proprietors of the land, who were the sole corporators and managers, with full corporate powers, until the election of directors, as well as the commissioners for receiving subscriptions to the stock, could and would make' adequate provision in the sale of shares in the adventure for the protection of their own interests as vendors, and that the corporators—the vendees—would consult their own interest in making joint advances for the improvement of the property purchased. The whole scheme was but a purchase, by those who became associated in the corporation with its original projectors, of the land of those projectors, and an arrangement for the working of the mines and vending of their produce, under the direction of a board of managers, and under such rules and regulations as the shareholders should from time to'time prescribe. The. lands were sold upon terms satisfactory to those interested; and, after the payment of half a million of dollars, they were content to rely for security for the payment of the residue upon the property transferred, without recourse to the 'individual responsibility of the purchasers ; and it was deemed proper that the interests of the shareholders should regulate the future calls upon- the stockholders for funds to enable the corporation to take measures for the carrying out the contemplated work of improving the property, by which alone they could hope for a return from the moneys already invested. If they should proceed with the work and make the venture profitable, the originators of the scheme would receive the balance due them; and if they should not, the lands would revert, and they would have their lands together with the moneys received upon their purchase. The act, therefore, well provides for annual meetings of the stockholders, as well as special meetings upon the call of stockholders or of the directors, and invests the stockholders with large powers in the dismissal of officers and in the making of by-laws and resolutions which shall be binding upon the directors and managers; and the by-laws adopted at the first organization of the corporation made the vote of five-sixths of the directors necessary to a call for payment upon the shares..

Again, no formal subscription was made for the stock: at least, none is set forth in the case, or appears to have been made. Those who became stockholders became such, not by subscribing to a paper by which they agreed “ to take,” or “ to take and pay for,” a given number of shares; upon which a promise to pay could be directly predicated, and upon which, in the cases upon this subject, a liability, to pay has been declared; but, so far as appears, they became stockholders by paying the amount fixed by law, or agreed upon with the corporators, and taking certificates for stock, with a clause therein, stating the further payments to which the stock might be subjected by the order of the directors; thus making the title of the purchaser or stockholder a conditional title under the by-laws, depending upon his payment of the future calls, but leaving such payment optional with him. This was clearly the terms, as well as the legal effect, of the contract with the defendant Sturgess. It was not an agreement by Mr. S. to pay forty-six dollars, or thirty-nine dollars, for the stock — eleven dollars or four dollars in hand, and thirty-five dollars on call or at a future time; but it was a purchase of the stock at eleven and five dollars, subject to a lien for thirty-five dollars additional. The very terms of the sale negative all inference of a promise by the purchaser to pay the additional sum. It is plainly inferable that this was the substance of the transaction with the original or first stockholders. The only paper subscribed by any shareholder is an acceptance of a proposition for the purchase of the lands mentioned; and several gentlemen accept the proposition to the amounts set opposite their respective names, amounting in the aggregate to $150,000; and that agreement is consummated by the transfer of title and payment of the-purchase price as agreed upon, so that the proposition and acceptance are functus officio; and if, by reason of that agreement and the payment of the sum agreed upon, the subscribers became entitled to and received certificates of stock, the certificates furnish the only evidence of the terms upon which they accepted and held the stock. There is no allusion to the capital stock of the corporation, or its shares, in the instrument itself* It was a paper got up for a special purpose, and has accomplished that purpose; and its operation and effect cannot be extended, to the prejudice of the subscribers and their successors in the corporation. In The Hartford and New Haven Railroad Company v. Kennedy (12 Conn., 499), and Same v. Brewer (id., 530), there was a formal subscription, which the court properly construed, under the circumstances and for the reasons finally stated by Hwthtgtom, J., but which have no application to this case, as a promise to take and pay for the stock, “ on the terms, conditions and limitations mentioned in the charter.” The charter expressly authorized the directors to require payment of the sums subscribed at such times as they might deem fit; and it was in connection with this clause of the charter, directly referred to by the subscription, that the contract was read; and this, in connection with the reasons connected with public interests, was controlling in the decision. Similar reasons were influential in Ward v. The Griswoldville Manufacturing Company (16 Conn., 593). Mann v. Cooke (20 id., 177), was by the receiver of the Canajoharie and Catskill Railroad Company, a corporation'of this State, upon a subscription which was special in its terms; and one question was upon the legality of that part, under which the defendant sought exemption from liability; and another important question was as to the right of the receiver to sue, and the case turned partially upon the construction and effect of a statute of this State which has not, so far as we know, been enacted in Maryland. It makes the stockholders directly liable to creditors for any sum remaining unpaid upon their stock. (1 R. S., p. 600, § 5.) The case was well decided, but does not directly bear upon the questions before us. Sagory v. Dubois (3 Sandf. Ch., 466), was not entirely unlike the last case, and was by a receiver of an insolvent corporation. The same principles were applied, and the defendant was held liable upon a subscription, by the terms of which he “ subscribed for” and “agreed to take” the stock. An agreement to take or buy necessarily implies an agreement to pay, unless there is something showing a different intention or agreement. The cases touching the rights and remedy of creditors are not important, unless a liability of the defendant is first established. Mann v. Currie (2 Barb., 294), makes the liability of the stockholder to rest upon contract, and not upon the relation, and is like the case of Mann v. Cooke (supra), and grew out of the insolvency of the same Company. In Northern Railroad Company v. Miller (10 Barb., 260), there was a promise in the subscription to take and pay for the shares; and The Buffalo and New York City Railroad Company v. Dudley (14 N. Y., 336), simply decides that an agreement to take a certain number of shares creates an implied, if not an express, promise to pay for them. Another question was the important one in the case. The liability is everywhere made to depend upon contract. (Ang. & Ames on Corp., § 517, et seq.; Huddersfield Canal Company v. Buckley, 7 T. R., 36.) This is expressly decided in The Andover and Medford Turnpike Corporation v. Gould (6 Mass., 40), in which it was held that where the members of a turnpike corporation have expressly agreed to pay the assessments that may be made by the corporation, an action lies for the corporation to recover the assessments; but if there be no such agreement, the sole remedy for the corporation is by the sale of the shares of the delinquent members. (See, also, The New Bedford and Bridgewater Turnpike Corporation v. Adams, 8 Mass., 138; The Worcester Turnpike Corporation v. Willard, 5 id., 80; The Franklin Glove Company v. White, 14 id., 286; Gray v. Coffin, 9 Cush., 199.) There was no express contract by the defendant Sturgess, or by any one to whose rights and liabilities he has succeeded, to take and pay for the stock; and no implied contract or promise is made out by the evidence. On the contrary, every circumstance shows that no such promise was made, or intended to be made, or understood to have been made; and it follows, that there is no personal liability which can be enforced by the corporation, or in behalf of and for the benefit of a creditor of the corporation.

The judgment must be affirmed, with costs.'

Denio, Ch. J., and Selden, J., expressed no opinion; all the other judges concurring,

Judgment affirmed.


author: Davies, J.

text:
    Lazier v. Westcott.
    Our statute in respect to the authentication of the records of the courts of foreign countries relates as well to provincial government as to imperial. It embraces the province of Upper Canada, as well as the kingdom of Great Britain and Ireland.
    The record of a judgment in Upper Canada is, therefore, properly authenticated by the clerk of the court, the secretary of state, and the governor of the province; and our courts will take judicial notice of their existence and authority, without any certification, by the imperial authorities.
    The public seal of such a state, attested by the governor-general, proves itself in the same sense and to the same'effect as the great seal of'Great Britain and Ireland.
    An exemplification of a foreign record is received in evidence without any statement therein, or other proof,- that it has been compared and found to be a transcript of the original. All that is implied by the statement by the proper authorities that they have caused the record to be exemplified.
    It is no objection to the reception and force of the exemplification that it contains interlineations and alterations, marked and verified as such by the initials of the clerk of the court. These are to be presumed properly noted by him at the time he authenticated the roll.

      The postea in the record stated that the judge presiding at nisi prim sent up the record had .before him on the 19th November, 1855, and it appeared that judgment was signed September 26, 1856. It was, therefore (plainly enough), properly averred in the complaint that the judgment was recovered on the latter day; and if this had been an error, it was amendable at the trial and would be disregarded on appeal.
    The judgment of a foreign court is conclusive upon the merits. The defendant can impeach it only by proof that the court had not jurisdiction of the subject-matter or of his person, or that the judgment was fraudulently obtained.
    Appeal from the Supreme Court. The facts are stated in the following opinion:

      James F. Starbuck, for the appellant,

      M. H. Merwin, for the respondent.
   Davies, J.

This is an action upon a judgment recovered in the Court of Common Pleas of Upper Canada against this defendant by this plaintiff. The cause was tried before a referee, who gave judgment for the plaintiff and judgment on his report to be affirmed at' general term.

On the trial the plaintiff offered in evidence an exemplication of the record of a judgment in the Court of Common Pleas of Upper Canada, which was received under objection and exception. Numerous interlineations, alterations and erasures, appeared in the record, but they all appeared to be marked or authenticated by the initials “ L. H.,” being the initials of the name of the clerk, and said initials appeared to be in the same handwriting as that of the signature of said clerk. The defendant’s counsel objected to the introduction of said, papers on the ground

1st. That this government does not recognize the province named in the record, as one of the independent powers of the world, and that it was not such in fact; and that the evidence of the authority of the officers acting, must come from the government creating them.

2d. That the paper is not authenticated in the- manner required by law.

3d. It is nowhere certified to have been compared with the original and to be a true transcript, &c., as required by law.

4th. It bears evidence upon its face of numerous erasures, alterations and interlineations, and it is averred that they all appear to have been made since its authentication.

5th. The facts sought to be proved by the paper offered, can be proved only by such testimony as is recognized and received in the courts of common law.

6th. If the record shows anything it is the recovery of a judgment November 19, 1855, whereas the complaint counts on a judgment rendered September 26,1856, and the variance is fatal. These objections were overruled and the defendant excepted.

I shall consider them in the order above enumerated. I do not read our statute in reference to the exemplification of the recqrds and judicial proceedings in any court in any foreign country as confining the admission of the records only of such foreign country as shall have been acknowledged by this government as one of the independent powers of the world, and with which we have diplomatic intercourse. I think the obvious meaning of the statute is to admit the records of any court of any foreign country, and it is quite immaterial whether such foreign country is one ' of the great powers of the world, or one of minor importance and having a circumscribed extent. The size of the country cannot alter the rule of evidence, and the records of a court of the Republic of San Marino are of equal validity as those of the Empire of all the Russias. The only question is, does the record come from a court of a foreign country ? If so,, and it is properly authenticated, it is to be admitted as evidence under the provisions of our Revised Statutes. (3 R. S., 5th ed., p. 678, § 26.) The court will take judicial notice that the Province of Upper Canada is a foreign country, and forms no part of our own (Ennis v. Smith, 14 How., 430): that it has a government and courts, and that those courts proceed according to the course of the common law. The record produced was, therefore, the record of a court of a foreign country, and it is authenticated by the attestation of the clerk of the court, with the seal of the court annexed. There is also attached the certificate of the chief justice of the court, that the person attesting such record, is the clerk of the court, and that the signature of such clerk is genuine. These papers are further authenticated by the certificate of the assistant secretary of state of said province, and' by the governor in chief of said province, having charge of the great seal of.said province, and which fact is attested by the affixing the great seal to said certificate, and which of itself imports verity, under the' authority of which government said court is held, and which certificate declares that such court is lawfully and duly constituted, and specifies the general nature of its" jurisdiction, and it also verifies the signature of the clerk of such court, and the signature of the chief justice thereof. It seems to me, therefore, that all the provisions of the statute have been complied with, to authorize the reading of this record in evidence in any court of this state. The referee, therefore, properly admitted it to be read. If I am correct in these views they dispose of the first and second objections of the defendant’s counsel.

The third objection is based upon' the assumption that it was offered in evidence, as á copy of the record of a court of a foreign country, under section 27, 3 R. S. 678, 5th ed. This is a mistake. It was' an exemplification of 'such record under the 26th section, and offered and received and authenticated as such. The provisions of' section 27 had therefore no application to the case, and were properly disregarded." The assumption in the fourth objection, that it appears by the record that the erasures, alterations and interlineations, made therein, were made since its authentication, is not sustained by any proof in the case, and certainly not from anything which I have been able to discover, as appearing on the face of the record. Those alterations seem to be verified by the initials of the clerk, and it is to be presumed they were made by tiim at the time he authenticated the roll. In reference to the acts" of such officers, the maxim of omne rite esse acta, is to be applied; and fraud and falsehood are not to be assumed without some evidence to warrant the assumption. There is nothing on the face of these alterations which would ;lead any one to doubt but that they were made in good faith and in accordance with the truth, by the proper officer anS at the appropriate time. The fifth objection is answered by the provisions of the statute. They declare that a record thus authenticated may be admitted as evidence, and when so admitted it becomes legal evidence of the facts set forth in the record. The legal effect of such evidence will be hereafter considered.

The sixth objection is wholly groundless. The exemplification states that- the enrollment of the judgment was on the 26th day. of September, 1856, in the court of Common Pleas, and at the foot of the judgment roll it appears to have been signed on that day. It was properly, therefore, averred in the complaint, that the judgment was recovered on that day in that court, and there wás not, therefore, any variance between the day laid in the complaint or that upon which it was recovered, and that appearing by the record itself. The variance between the allegation and the pleading, if it had been of the character assumed by the objection, could not have been material, and it could not have misled the defendant,, and might have been disregarded. -If the party had been misled, he could have satisfied the court thereof, and then the pleading ■ could have been amended in- conformity with section 169 of the Code. But it was competent for the Supreme Court at any time under section 173 to have amended the pleading by making it conform to the facts proven, when in this instance it was but correcting a mistake in a date, and this court on appeal will. assume the amendment to have been made. There is nothing in this objection in any point of view in which it may be regarded.

There remains to be considered the question whether the judgment in the court of a foreign country, duly proven,.is conclusive between the parties, when there, has been a trial upon the merits, and there is no fraud or want pf jurisdiction, or mistake shown or offered to be shown. In other words, whether the merits of the case are to be retried in another tribunal in another action between the same parties.

Section 28 of volume 3, Revised Statutes, 678, 5th ed., declares that the provisions of sections 26 and 27, in reference to the manner of proving-judgments recovered in the courts of foreign countries, shall not be construed as declaring the effect of any record or judicial proceeding authenticated as therein prescribed.' Much discussion and not a little contrariety of decision has obtained in England and in this country a? to the conclusiveness of a judgment obtained in a foreign country, when sued upon in the courts of England or of this country. The rule may now be regarded as firmly settled in England, that the judgment is conclusive, so far as. to preclude a retrial upon the merits. It remains competent for the defendant to show that the foreign court had not jurisdiction of the subject matter of the suit, or that the defendant was never served with process or that the judgment was fraudulently obtained. (Henderson v. Henderson, 6 C. B., 288; Ferguson v. Mahen, 11 Ad. & Ellis, 179; Ricardo v. Garcias, 12 Clark & Fin., 368; Bank of Australia v. Nias, 4 Eng. Law & Eq., 252.)

The same rule was early enunciated in this state by Chief Justice Kent in Taylor v. Boyden (8 John., 173). He there says: “ To try over again, as of course, every matter of fact which had been duly decided by a, competent tribunal, woidd be disregarding the comity which we justly owe to the courts of other states and would be carrying the doctrine of re-examination to an oppressive extent. It would be the same as granting a new trial in every case, and upon every question of fact. Suppose a recovery in another state or in any foreign court in an action for a tort, as for an assault and battery, false imprisonment, slander, &c.‘, and the defendant was duly summoned and. appeared and made his defence, and the trial was conducted orderly and impartially, according to the rules óf a civilized jurisprudence, is every such case to be tried again here upon the merits ? I much doubt whether the rule can ever go to this length. The general language of the books is that the defendant must impeaph the judgment by showing affirmatively‘that it was unjust, by being irregularly or unfairly procured.”

In Monroe v. Douglas (4 Sand. Ch. R., 126), a very elaborate and learned review is taken of the cases as to the conclusiveness in our courts of the- judgments of the courts of other countries, and it is declared by that learned and eminent judge, Vice-Chancellor Sandfobd, that when the foreign judgment is produced in evidence and appears to be regular in form and to.contain the essential facts of an adjudication of the controversy made between proper parties, the burden of showing its invalidity rests upon the party who desires to impeach'it, and hp can only show in contesting its validity, that it w.as procured, by fraud, or that it is void on, its face, or void by the local law, fori rei judicatce. Mr. Justice Stoby reasons, strongly in favor of the dqctrine of the absolute conclusiveness of foreign judgments. (Conflict of Laws,. § 607), and holds that this is the more convenient and the safest rule and the more consistent with sound principle, except in cases in which the court, which pronpunced the judgment had not due jurisdiction of the case and of the defendant, or the proceeding was in fraud or founded in palpable mistake or irregularity or bad by the law of rei judicatce ; in all such cases he says, the justice of the judgment ought to be impeached.

In Cummings v. Banks (2 Barb., 601), Edwards, J., in de-. livering the opinion of the court, says, his ■ inclination is to side with Judge Stoby ; and Vice-Chancellor Shadwell, in Martin v. Nichols (3 Simmons, 458), and indeed the English courts generally hold the foreign judgment conclusive, except, of course, for fraud, mistake or want of jurisdiction, and he thinks that the better opinion in this, country as well , as in England. The same doctrine ■ has been laid down by the Supreme Court of Ohio in the case of Silver Lake Bank v. Harding (5 Ham., 545). But in Vermont the rule has been stated, as contended for by the defendant’s counsel. There Chipman, Ch. J., in King v. Gilder (1 D. Chip., 59), held that if the defendant in an action on a foreign judgment produced evidence to raise a presumption that the plaintiff’s original claim was groundless, this will put the plaintiff to prove his demand efe novo, and the trial would then be had as if no judgment had been previously rendered. I find no authority for such a doctrine in this state, and it seems to me to be in hostility to our own cases and the better rule as enunciated by able text writers and learned judges.

The views suggested by Judge Stoby seem to be eminently correct, and most in harmony with sound principle and the best considered- cases. He very truly says that it would be difficult to perceive what could* be done if a. different doctrine were maintainable to the full extent of opening all the evidence and merits of the case anew in a suit upon the foreign judgment. He inquires “ in a case of covenant or of debt, or of a breach of contract, are all the circumstances to be reexamined anew? If they are by what laws and rules of evidence and principles of justice, is the validity of the original judgment to be tried ? Is the court to open the judgment and to proceed ex cequo et bono f Or is it to administer strict law and stand to the doctrines of local administration of justice ? Is it to act upon the rules of evidence acknowledged in its own jurisprudence, or upon those of the foreign jurisprudence ? These and many more questions might be put to show the intrinsic difficulties of the subject.” Holding that the judgment was only to be regarded- as prima facie evidence for the plaintiff, lie correctly says would be a mere delusion if the defendant might still question it by opening all or any of the original merits on his side, for under such circumstances it would be equivalent to granting a new trial. He concedes that the defendant ought to be permitted to show that the court had no jurisdiction, or that he never had any notice of the suit, or that it was procured by fraud, or upon its face it was founded in mistake, or that it is irregular and bad by the local law. Beyond this, he insists, the right to impugn the judgment, is in legal effect the right to retry the merits of the original cause at large, and compel the plaintiff to establish again those merits and his rights to a recovery.

At the last term of this court in the case of Rocco v. Hackett, we held a judgment recovered in Massachusetts, when the court there had acquired by the laws of that state jurisdiction of the party, in a suit upon that judgment in the courts of this state, conclusive upon the parties, and that the merits of the controversy could not be retried here in such action. We think the rule adopted in England, holding the same doctrines as to foreign judgments and recognized in this state, should be adopted and adhered to here, in respect to such foreign judgments, and that the same principles and decisions which we have made as to judgments from the courts of other states of the Union, should be applied to foreign judgments. The judgment should therefore be affirmed, with costs.

A11 the judges concurring,

' Judgment affirmed.