Vicksburg, Shreveport & Texas Railroad v. McKeen , 14 La. Ann. 724 ( 1859 )

Land, S.

The defendant subscribed to the capital stock of the Vicksburg, Shreveport and Texas Railroad Company, the sum of one thousand dollars, making forty shares, and paid thereon, at different times, five hundred and fifty dollars; and on a call made by the company for the balance due, refused payment and transferred his stock to R. II. Watmore, which transfer he plead in bar of this action, instituted for its recovery.

The sufficiency of this defence depends upon the interpretation of section sixteen of the Act of Incorporation, or charter of the company, which is in these words :

“ Stock books shall be kept in the office of the company. Certificates of stock shall be issued to the share holders, to be signed by the President of the Board of Directors, for the time being; aud no transfer of stock shall be binding on the company until made on its stock books. No transfer of stock shall exempt the party transferring it from the obligation of paying installments afterwards called for, until fifty per cent, on each share shall have been paid. Act of 1853, p. 186.

The exemption from liability for the balance of the installments, after the payment of fifty per cent, on each share, by virtue of a transfer of stock, creates the difficulty of the case. And a strict and literal construction of the language of this section of the Act would perhaps sustain the defence to the action; but it would lead to consequences not intended by the lawgiver, and thereby defeat his will.

In this case, a call was made on the defendant for the balance due on his subscription, on the 2d of March, 1858 ; and on the 25th of the same month, he transferred his stock to Watmore, and thereby defeated, (if his defence be valid in law,) the right of action of the company against him for the unpaid installments which were then due.

The provision in the sixteenth section of the Act relative to the transfer of stock was made upon the presumption that each installment would be demanded and paid at maturity, and that the exemption from liability to the company would only extend to the unmatured installments, after the payment of fifty per cent, on each share of stock.

It is, therefore, the opinion of the court, that after the maturity of the installments, the right of exemption, by virtue of the transfer, was extinguished, and that, notwithstanding the transfer on the stock books, the defendant was still liable to the company for the unpaid balance then due. The right of transfer, to have the effect contended for, must be exercised iu perfect good faith, and in pur- v, suanee of the true .intent and meaning of the Act.

It is, therefore, ordered, adjudged and decreed, that the judgment be affirmed, with costs.