Haynes v. Brown , 36 N.H. 545 ( 1858 )

Bell, J.

On the motion for a nonsuit the question arises whether competent evidence was presented to the jury, on which they could be justified in finding a verdict for the plaintiff.

1. Was there competent evidence of the existence of the corporation, as alleged ?

“ The existence of a corporation, incorporated by private .act, may be shown, either by an exemplified copy of an act, authenticated by affixing thereto the seal of the State, without other proof; by a sworn copy of the same, or by admission ; all such proof being accompanied by proof of acts of user under the act or charter.” Ang. & Am. Corp. 572 ; State v. Carr, 5 N. H. 367, and cases cited; 1 Greenl. Ev., sec. 480.

Where the corporation was a domestic corporation, the printed statute book, as printed by the printer to the State, has been admitted as evidence of the act of incorporation. Ib.; Wood v. Jefferson Co. Bank, 9 Cowen 205 ; Anon., 2 Salk. 566.

In the case of New-Boston v. Dunbarton, 12 N. H. 409, and 15 N. H. 201, and in Bow v. Allenstown, 34 N. H. 351, it was held that in a case where no charter or act of incorporation could be found, a charter may be presumed from the long continued exercise of corporate powers without objection; and in the last case, that a grant of corporate powers may be implied, where otherwise the manifest purpose of any legislative act would be defeated.

In this case no sworn or authenticated copy of any act of incorporation was produced, and no copy in the authorized printed statutes was shown, and no evidence of loss, or secondary proof was offered.

The courts will not ex officio take notice of private acts. They must be proved. 1 Ch. PI. 218; 1 Greenl. Ev., sec. 480. They will not be noticed unless given in evidence. Griswold v. Kemp, 1 C. & M. 635.

Though the acts of user were sufficient, if a charter had been shown, there was no competent evidence of an act of incorporation, and there was consequently a failure to prove the existence of the corporation in the ordinary mode.'

But besides the proof of a corporation by the two steps of showing a charter and the action of the grantees under it, or a user of the franchise, evidence may be offered which goes to the fact of the existence of the corporation without reference to these successive steps. Such is the admission of the existence of the corporation by the party against whom the evidence is offered, either by his express declarations, or by his acts, necessarily, or by fair construction and inference, implying the fact. Ang. & Am. Corp. 574; Congregational Society v. Perry, 6 N. H. 164.

No declarations of the defendant were shown. But it was proved by one witness that he was present when the corporation was organized by the choice of officers, and that the.defendant, at meetings of the corporation, and at meetings of the directors, acted as its president, and that shortly after its organization the corporation commenced business. Another witness testified that he was secretary and treasurer of the corporation, and that he received a number of books as books of the corporation, of which he produced one, which purported to be a stock-book, and he said he had a book of certificates of stock, though he thinks no certificates were issued. The note produced is signed the Manchester Car and Machine Works, by Hiram Brown, (the defendant) president.

These circumstances, very meagre indeed compared with the evidence which might be supposed to exist, seem to us to have a strong tendency to show an admission by the defendant of the fact that there was a corporation duly constituted and organized by the name of the Manchester Car and Machine Works, on which, as against him, the jury would have the right to regard that fact as proved.

It is for them and not for the court to judge of its weight. The absence of other evidence of the organization and acts of this corporation, or company, is somewhat explained and accounted for by the testimony of the secretary and treasurer, who says he had the books, but has them not at this time, nor any knowledge where they are.

2. It is wholly immaterial in this case, whether a corporation has been legally organized or not, or whether it has complied with the requirements of the charter, or laws, or not. That is a matter to be settled in a suit between the government which created the corporation and the corporators, and not collaterally, in any action between third persons and either the corporation or the corporators. State v. Carr, 5 N. H. 371; Ang. & Am. Corp. 575, and many cases cited.

3. The proper and usual evidence that a party plaintiff is a stockholder of a corporation, is the production and proof of his certificate, which is in his own custody and control, but the evidence of the same fact by a stranger must ordinarily be derived from the books of the corporation, which are evidence in the nature of public records, as to every body, of the corporate proceedings. The absence of these records was sufficiently accounted for to make parol evidence of the same matters admissible. The evidence tended to show that the defendant was a stockholder. His attendance at the meetings, and acting as the president, was competent proof for this purpose. If he was not a stockholder, it would be an answer to the action, and it was in the defendant’s power readily to show it; if he offers no evidence, a jury would be warranted to infer from these circumstances that he was a stockholder. In Chesley v. Pieree, 32 N. H. 402, the court declined to decide that either a certificate or payment was essential to constitute a stockholder. If a party, with the assent of the grantees or of the corporation, has assumed the position and duties of a stockholder, he may be held to the responsibilities of one, without either payment or a certificate. The evidence has a tendency to prove that there were other stockholders. If so defacto, it is not material that they were legally such.

It might be of consequence, in a suit for assessments, to show that some amount of stock was limited and fixed by the charter, or the corporation. Littleton Mg. Co. v. Parker, 14 N. H. 543 ; Central R. R. v. Johnson, 30 N. H. (10 Foster) 390.

But in an action against the individual stockholder to charge him personally, because the corporation have failed to perform their duties, this seems immaterial. The stockholder is made, by the statute, “ jointly and severally liable for all debts, &c., of the corporation, until the whole amount of the capital fixed and limited by such corporation shall have been paid in, and a certificate thereof shall have been made and recorded,” &c. (Laws of 1846, chap. 321⅜ sec. 2 ; Comp. Stafc., 312.) Until such amount is fixed, the condition on which the stockholders are- exonerated from individual liability cannot be performed.

4. “ No suit against any stockholder, for the collection of any such debt or liability, shall be commenced until after a legal demand of payment thereof shall have been made upon the company ; and upon such demand being made, if the officers and stockholders of such company shall discharge -such debt or liability, or expose unincumbered personal property of such company, liable to attachment, and sufficient, &c., then no such suit shall be sustained against the stockholders.” Rev. Stat., chap. 146, see. 3. Objection is made that there was no such legal demand. The case shows that a written demand was served on the defendant, as president, and on others, as director and treasurer, by leaving with each an original of which a paper returned is a copy. In the case of Phelps v. Gilchrist, 28 N. H. (8 Foster) 277, the Superior Court had occasion to consider the sufficiency of such a demand to charge a man with breach of contract, or a conversion of property, and it was held that such a demand as the law requires must be personal and verbal, though it may be judicious, to prevent controversy, to make such demand in the terms of a written paper, and to give the party a copy. It is a call by a person authorized to receive the property demanded, for its delivery made upon the person, who is then bound to make such delivery. It must be such that the person called upon may at once discharge himself, by giving up the property, in this case by paying the debt. Edwards v. Yeates, R. & M. 360. The paper left with the defendant and other officers of the Car Works was signed by the plaintiff’s attorneys, but it was left by another person. There was, consequently, no opportunity to make the payment, if there had been a disposition to do it. The evidence, then, of a demand was insufficient.

If the defendant or others had made no objection to the manner of the demand, and had distinctly refused to pay, it would be a waiver of any objection on this account. It does not appear that they were aware of the contents or objects of the paper until the messenger had gone.

It was objected that the claims of several persons cannot be joined in the same demand, but there does not seem to be any ground for this objection. The note and account of the plaintiff were not exhibited, and it is said the demand was insufficient on that account, but copies of both were set out in the written demand. If a verbal demand had been made in the terms of that writing, by a person authorized to receive payment, it would seem to be sufficient, unless the papers were called for, or, objection made on that account.

The demand made by the officer upon the writ was not a compliance with the requirement of the statute, which forbids a suit against the stockholders until after a legal demand of payment. Here the demand was not one of payment. The writ was shown, and the officers were requested to show property to be attached, and nothing more. The evidence offered was not competent to show a demand of payment, and it should not have been admitted. The want of such evidence was good cause of nonsuit.

5. Two witnesses testified to the services charged in the plaintiff’s account. One of them testifies he had charge of one branch of the company’s business, and in that capacity employed the plaintiff, and both state something of the time he was employed. This evidence was competent; it was for the jury to decide whether it was sufficient to prove the whole, or any part of the claim.

6. The Supreme Judicial Court has concurrent jurisdiction, with the Court of Common Pleas, of all civil actions at common law, where more than one hundred dollars shall be claimed in damages. Stat. 1855, ch. 1659, sec. 8, p. 1541. The jurisdiction depends on the amount of the damages demanded, and not on the amount recovered. The plaintiff cannot recover costs by section 6, unless he had a reasonable expectation of recovering more than one hundred dollars; but the jurisdiction is not affected, however small the amount recovered.

7. It is claimed that stockholders are answerable only in cases where the claim is liquidated or adjusted. The whole personal liability is created by the statute, and must be governed by its provisions ; and we find nothing which restricts the liability to liquidated claims. By the second section of the statute of 1846 it is provided that the stockholders and officers [of corporations] shall be personally liable for the debts and civil liabilities of such corporations, in the following cases, &c.; and by the first subsection, they shall jointly and severally be liable for all debts and contracts of such corporation, &c. By section 2 of chapter 146 of the Revised Statutes, “ proper actions of debt ■ or assumpsit, for the collection of such debts or liabilities, may be commenced and prosecuted against any one or more of said stockholders, &c.; and in the 3d, 4th and 5th sections of the same chapter the provisions apply to debts and liabilities ; and in the 4th section of the statute of 1846 the language is debts and civil liabilities; while in the second to the seventh subsections of the first section of the statute of 1846, the liability is confined to debts of the corporation. The present case falls under the first subsection of the statute of 1846, which is not confined to debts, but applies to debts and contracts.: and we think it cannot be restricted to debts, or liquidated claims.

8. It is objected that the action should be either debt or assumpsit, and this is neither. The defendant is required to answer in a plea of the case, and the facts supposed to be necessary to bring the case within the provisions of the statute are set out, and it is then alleged that an action accrued to the plaintiff to recover of the stockholder, &c., but no promise is stated. This is a sufficient declaration in debt, but is insufficient in assumpsit, upon a demurrer; but defects in a declaration cannot be taken advantage of on motion for a nonsuit, and the defect would be cured by a verdict, as being but a defective statement of a good cause of action.

9. A book called a stock-book was put in evidence, whicb was objected to, because the entries were not made by the defendant, and it does not appear by whom they were made. It contained entries of assessments and of the payment of them.

The records of a corporation are evidence in some cases and for some purposes. The rule generally laid down in the elementary books is, that “ the books of a corporation, whether containing entries of a public or private nature, are admissible in evidence as between themselves, but not against a stranger.” 2 Saund. P. & E. 748; Ang. & Am. Corp. 607 ; 2 Phil. Ev. 122.

The present case is not one where the parties are members of the same corporation, and it is therefore unnecessary to inquire whether the rule is not laid down more broadly, or with fewer qualifications, than it ought to be.

There is no question that the records of a corporation are evidence of the proceedings of the corporation itself. 1 Greenl. Ev. 542, sec. 493 ; Turnpike v. McKean, 10 Johns. 154; Ang. & Am. Corp. 471 ; Wood v. Jefferson Co. Bank, 9 Cowen 194, 205; Case of Thetford, 12 Vin. Ab. 90, Pl. 16 ; Arvings v. Speed, 5 Wheat. 424; Smith v. Steamboat Co., 1 Haw. Miss. 479; Whitman v. Granite Church, 11 Shep. 236; Coffin v. Collins, 5 Shep. 440; People v. Oakland Co. Bank, 1 Doug. 282; as of its organization; Duke v. Navigation Co., 10 Ala. 82; Hall v. Cary, 5 Ga. 237;, McFarland v. Ins. Co., 4 Denio 392; cases cited in Ang. & Am. Corp. 471. Of its meetings and the election of its officers and members; Gibbon’s Case, 17 Haw. St. Trials 810, 814; and of the votes and acts of the corporation and of its officers, where those acts and votes are required, either by the charter or by-laws, to be recorded; or where they are in fact transacted at meetings of those officers, at which there is a clerk to keep the records.

To render these books admissible for these purposes, the party who introduces them must show that they are the books of the corporation, independently of what appears upon the books themselves. Whitman v. Granite Church, 11 Shep. 236 : that they have been regularly kept by the clerk, or other proper officers. 12 Vin. Ab. 90, Pl. 16 ; Turnpike Co. v. M’Kean, 10 Johns. 154 ; Rex v. Mothenvell, 1 Stra. 93 ; Phill. Ev. (1 Am. Ed.) 319; and if there is any thing suspicious in their appearance, or if any doubt is cast upon them by the testimony, that they were made at the times they purport to have been, and have not been made up subsequently, to answer some purpose of the corporation, or others.

But the entries in the books of a corporation relating to other matters of fact than the proceedings of the corporation, are not evidence in their favor, in a controversy between them and any stranger, nor between them and a member of the corporation, holding or claiming adversely to them. 2 Saund. 1 & E. 748 ; Ang. & Am. Corp. 607; 1 Greenl. Ev. 542. Neither are they evidence against a member of the corporation, of his contracts or private dealings with the company. In that respect he is to be regarded as a stranger. 1 Phill. Ev. 358 ; Hill v. Manchester Water Works Co., 2 N. & M. 573; 2 B. & A. 545.

This principle was recognized in the case of Marriage v. Lawrence, 3 B. & A. 142 ; in Brett v. Beales, 1 M. & M. 350 ; Mayor of London v. Mayor of Lynn, 1 H. B. 214, note c ; Jerman v. Worth, 5 Denio 342 ; 1 Phill. Ev. 151, Am. Ed. 319.

As the books of a corporation are not evidence, as between the corporation and a member or a stranger, as to their business transactions, it follows a fortiori that they cannot be so as between a member and a stranger, or between two strangers; and the cases of Brett v. Beales, Jackson v. Walsh and Jerman v. Worth, before cited, are direct authorities to this point.

There are, then, two capital and fatal objections to the stock-book as evidence ; first, it does not appear that the entries are made or the books kept by any proper officer of the corporation ; and second, they are not properly records of the corporate action of the company, or its officers, but merely accounts of their private pecuniary transactions, which are merely the written statements of some person about their dealings, and mere hearsay. The person who made them may be found and put on the stand. This evidence, then, was improperly admitted.

For this and other causes, before stated, the verdict must be set aside, and a

Hew trial granted.