Van Dyke v. Stout , 8 N.J. Eq. 333 ( 1850 )

The Chancellor.

The charter provides, that the Commissioners, or a majority of them, shall open books for subscription, at such times and places as they should designate by three weeks previous public notice in a newspaper, and continue the - same open until the stock should be subscribed, or, at their discretion, close the same after they have remained open two days, and again open the same at some other time and place, giving public notice thereof as aforesaid; 5 per cent, on each share subscribed to be paid in specie or in bills of banks which redeem their bills in specie, at the time of subscription; the powers of the Commissioners to cease on the appointment of the board of directors; the said board, when appointed, to have power, from time to time, to open the books for further subscription, until the whole stock, §50,000, should be subscribed. That, as soon as conveniently might be after §15,000 should be subscribed, the Commissioners should convene the stockholders, by public notice to be given as aforesaid, to choose the first board of directors ; the stockholders to be allowed one vote for each share which they have held in his or her name at least fourteen days before the time of voting.

The Commissioners opened the books for subscription on the 15th of December, 1849, having given the public notice „ required; and 1600 shares wer'e subscribed on that day; of which number the complainant subscribed 1250.

The Commissioners, thereupon, gave the public notice required by the act of a meeting of the stockholders, to be held on the 24th of January, 1850, at New Brunswick, for the purpose of choosing directors, fixing, in'the notice, the hour of 11 in the forenoon as the time when the election for directors should take place.

On that day, the Commissioners, without having given any second notice of the opening of the books for subscription, opened them for that purpose, at about 10 o’clock, and several subscriptions were made, amounting to 350 shares; and just before the hour of 11, one of the Commissioners said it would be proper to close the subscription book by resolution, and made a motion to that effect; and at or just before the making of this motion, Joseph C. Potts, who was then, and had been for some time, sitting at the table on which the subscription book lay open, subscribed 1250 shares. The complainant then offered to make an additional subscription for shares, but the Commissioners declined permitting him to do so, on the ground that the time fixed for closing the book had elapsed. The Commissioners accepted Potts’s check on a bank in Trenton for the 5 per cent, on each of the 1250 shares so subscribed by him.

Including the subscription so made by Potts, there was more stock subscribed for than the act of incorporation allowed; and the Commissioners made an apportionment of the stock, by deducting from the subscriptions made by the complainant and Potts the whole of the excess over the number of shares allowed by the act; allowing to the complainant and Potts, each, 705 shares and votes. The complainant protested against this proceeding, and claimed to be entitled to 1250 shares, and as many votes in the election for directors. This claim was denied him; and he refused to vote on 705 shares only, and refused to receive back from the Commissioners the percentage he had paid them bn the shares on which they refused to allow him to vote. At the election so held, Potts’s vote on 705 shares of the 1250 so subscribed by him was taken; and one of the Commissioners, and the said Potts, and three others were elected Directors; and the persons so elected have issued proposals for the building of gas works.

No authority is given to the Commissioners hy the charter to make an apportionment of stock, if more than the whole number of shares be subscribed.

It appears to me, that the persons claiming to have been thus elected directors, cannot, consistently with the provisions of the act of incorporation, be recognized as such by this Court; and that they ought not to be permitted to proceed in the construction of the works contemplated by the act, and the expenditure of the money of the stockholders; and that, therefore, the injunction should be retained.

I am of opinion, first, that the book for subscriptions for stock cannot be considered to have remained open for subscription from December 15, 1849, to January 24, 1850. More than $15,000 had been subscribed on the day first mentioned, the day fixed by the public notice for opening the books; and the Commissioners, thereupon, gave the required public notice of a meeting of the stockholders for the choice of directors. The obvious meaning of the act, I think, is, that if, on $15,000 being subscribed, the Commissioners give notice of a meeting of the stockholders for the election of directors, it is a notice to those who had become stockholders, by thus subscribing the $15,000 or more, that the election for directors is to be made by them *, and the stock subscription book must, it appears to me, be considered as closed on the giving of that notice. If this be so, then the books were improperly opened for subscription on the 24th of January, 1850; for no public notice had been given that the books would be open for subscription on that day.

But, secondly, if the books for subscription could be considered as properly open for subscription on the 24th of January, 1850, it is ,clear that the Commissioners could not lawfullyreceive votes for directors on shares subscribed that day; the act expressly declaring, that the stockholder must have held his shares fourteen days previous to the election to enable him to vote on them.

Again, I am of opinion, that, if shares subscribed on that day could be voted upon, yet, that an excess of shares subscribed that day, beyond the number of shares remaining open for sub-scrip tion .by the terms of the charter, could not affect the right of the complainant to vote on each and every share so previously subscribed by him; and that the Commissioners had no authority to make any apportionment of shares which would limit the complainant’s right to vote to any smaller number of shares. If shares subscribed that day could be voted upon at all, the plain course of the Commissioners was, to have reduced the shares and votes of Mr. Potts to the number remaining open for subscription, by the terms of the act, when he made his subscription.

I think the nature of the wrong done to the complainant such as to call for the interposition of the Court, to restrain the persons who were declared directors because they received a majority of the votes cast, at an election for directors conducted on the principles adopted by the Commissioners in this ease, from proceeding with the works contemplated by the act.

Motion denied.