Mitchell v. Rome Rail Road

By the. Court.

Benning, J.

delivering the opinion.

The first assignment of error is, that the Court below permitted the “paper or note described in the declaration” to be read as evidence to the Jury.

That paper or note is in the following words:

“ Rome, September 10th, 1846. $500; Due the Memphis Branch Rail Road & Steamboat Company of Georgia, Eive Hundred Dollars, payable on de.rnand. D. R. MITCHELL.”

The objections made to the admission of this paper in evidence, may be resolved into two. 1. That the charter did not authorize the company to take such a note. 2. That if the charter did this, the note, itself, was not expressed to be on consideration.

The charter contains this section: “ That the company aforesaid, shall be deemed a common carrier, as respects all goods, wares, merchandise and produce entrusted to them for transportation, and shall have full power and authority to do and perform all and every corporate acts as are permitted or allowed to other companies incorporated for similar purposes.” (Acts of 1845, 109.)

Among “other companies incorporated for similar purposes,” .may, no doubt, be included the Central Rail Road & Banking Company of Georgia, and the Macon and Western Rail Road Company. And these companies, by their charters, have the-general power to “make contracts.” (Pr. Dig. 300, 326, 314. Pamph. Acts 1847, 181.)

A promissory note is a contract.

These companies, therefore, have power, respectively, to be ■ a party to a promissory note.

And so, therefore, was the company that is the defendant in error in this case.

The first objection, then, to the admission of the note'was not a good one.

Neither was the second. This was a promissory note, although no consideration was mentioned in it. (Waithman vs. Elsee, 1 Carr. & Kerw. 35. Curtis vs. Rickards, 1 Mann. & Granger, 46. Story’s Prom. Notes, §§14,181. Chitty on Bills, 79.)

[1.] The Court below was right, therefore, in admitting the note to the Jury.

[2.] And if right in that, the Court was also of course right, in over-ruling the motion to dismiss the case, on the alleged ground of a want of evidence to support the case. The note was, prima facie, sufficient to support .the plaintiff’s case.

For aught that appears, the statements of John P. King were not authorized by the company; if not, they were not binding, on the company. Therefore, it was right in the Court below not to let his statements go to the Jury as evidence against the company.

[3.] The sayings of a stockholder do not bind the corporation.

[4.] The extract from the minutes of the corporation which the Court below admitted to the Jury as evidence, was merely irrelevant. And though irrelevant evidence is illegal evidence■ yet, a new trial ought not to be granted solely on the ground, of the admission of such evidence. In such a case, the presumption, at least prima facie is, that the evidence, as it cannot legally, so it does not actually, influence the Jury, in the-formation of their verdict.

In this case, there appears nothing to rebut this presumption.

Therefore, the fourth assignment of error is not a good one.

Had a motion been made in the Court below for a new trial, on this ground, the decision of this Court would, under the New Trial Act of 1853~’4, have had to be different.

The next assignment of error is, that the Court below erred in refusing to charge the Jury, that any material or essential alteration of the original charter, without the assent of the defendant, (Mitchell,) relieved him from the payment of the note.

Before the alterations referred to had been made, the stock of the plaintiff in error, Mitchell, had been forfeited to the company, and he had therefore, ceased to be a stockholder in the company.

It appears, from the evidence of Yarbrough and Hardin, that this note had been given by Mitchell, “in place of payment in cash, of the first instalment for stock.”

Still, as Mitchell had ceased to be a stockholder in the company, at the time when the alterations in its charter were made, his assent or dissent to those alterations was a matter of no consequence. Assent or dissent to them was a matter solely for the persons who, at the time of the alterations, were the stockholders.

[5.] This being so, the liability of Mitchell to pay the note would not at all be affected by the alteration in the charter. The note stood in the place of so much cash paid in. And by the alteration in the charter, Mitchell no more got the right to be exempted from liability to pay the note than he would if, instead of giving a note, he had paid the money, have got the right to have back the money.

This assignment of error is therefore not well founded.

Eor the same reasons, neither are the next two assignments.

The next assignment of error, after those two, is the refusal of the Court to charge the Jury, without qualification, that the company had no power, under their charter, either to give or to take notes payable on demand. The Court gave this charge with the qualification, “ unless in the prosecution of the business of the corporation.”

We have already, in considering the first assignment of error, seen that the company had the general power to “make contracts.” And the conclusion we draw from that was, that the company had the right to be a party to a promissory note, because that is a contract.

In addition to what was said on that assignment, it may be said here, that the sixth section of the charter impliedly confers on the company the power “ to give" promissory notes. That section has in it these words : “and the evidences of debt of said company shall be binding only on the funds of said company, when signed by the President and attested by the Secretary and Treasurer.”

The Court below, then, might well have refused to give this charge, even with a qualification.

The next assignment of error is, that the Court refused to charge, that if “ the amount required to be paid in before the organization, was not paid in, the organization was not legal, and the acts done under such organization are not binding”— and instead, charged, “ that if defendant participated in said organization and acted as a director for some time,” he could not then object to the organization.

The words of the charter which seem to bear upon this point, are the following : “ Sea. 4. Andbe it further enacted by the authority aforesaid, that the capital stock of said company shall consist of ten thousand shares of fifty dollars each; but the number of shares may bo increased one third ; and upon the subscription for shares in said stock, the subscribers shall pay the sum of five dollars upon each share subscribed for .by such subscriber: Provided, that said company may commence the construction of their rail road and boating, so soon as three thousand shall be subscribed.”

The payment of the five dollars on each share, at the time of subscription, is not, by this section, made a conditionprece-. dent, either to the existence of the company as a corporation, or to its right, as a corporation, to commence business. Indeed, the first section of the Act had expressly made the company a corporation. And the proviso in this section authorizes it to commence boating and the construction of the road, as soon as three thousand shares should be subscribed. According to the proviso, the company did not have to wait, not only until it had got three thousand shares subscribed, but also until it had received five dollars on each of the three thous- . and shares, before it could begin business.

And if these things be so, the payment of five dollars a share on the subscriptions, at the time of the subscriptions, was not a condition precedent to the organization of the company as a corporation. And for this reason, the Court below would have been j ustified in its refusal to give the charge. Doubtless, if this payment were a condition precedent to organization, the acts done by the company, unless this condition had been complied with, would be void; and void, notwithstanding any subscriber might have participated in them and given them his sanction; or might have taken part in any 'pretended organization, and even have become a director under a pretended organization. To this effect is the decision of this Court in Napier et al. vs. Poe et al. (12 Ga. R. 184,) a case, in which the payment in • of a certain per cent, by the subscribers for stock, was a condi- • tion precedent to organization or to the right to do business.

But although we cannot sanction the reason given by the -Court for its- refusal to make this charge, we have to sanction the refusal itself, because that, it appears to us, was right, for 4he reason which we have given — the reason, that the payment of the five dollars was not a condition precedent to organization.

The next assignment of error, is the refusal of the Court to charge, unqualifiedly, “that the giving or taking a note, payable on demand, for money loaned, is not within the scope of the design or the authority of the corporation, the plaintiff in -the action.” The Court qualified this by adding to it, that the presumption of law was in favor of the notes having been given ■for the purposes and objects of the corporation, i. e. as we un- ■ derstand, the addition — in favor of the notes having been given as a means to accomplish some of the authorized ends of the corporation.

,¿¡And we think the Court was right in making this addition to the charge.

[7.] The charter, as we have again and again seen, authorizes the corporation, in general terms, to “ make contracts.” Therefore, contracts made by it which, like promissory notes, do not, on their face, disclose the objects for which they were made, are, it is to be presumed, until the contrary be shown, such as the charter authorizes it to make. No person, whether artificial or natural, is to be held to be a law-breaker, without some proof to show that he is one.

The next assignment of error, is the refusal of the Court to charge, unqualifiedly, that if “ the note was given for loaned money, it is void.”

[8.] This charge the Court, we think, was warranted in not giving, by the absence of evidence on which the charge might stand. There was no evidence that the note was given for “loaned money.” The resolution authorizing the money paid in for stock to be loaned back to the stockholders, was passed the day after the date of this note.

Besides, there is the positive testimony of two witnesses, Yarbrough and Hardin, that the note was given for stock.

Instead of making this charge, the Court charged, that if the note was given as a payment for stock, and Mitchell “ was present, assenting thereto, and acted, for sometime thereafter, as one of the directors, he is bound to pay the note.”

[9.] The fourth section of the charter does not say that subscriptions on which, at the time of subscription, five dollars a share shall not have been paid, shall be void. On the contrary, it says what is equivalent to saying, that even in that case, they shall not be void; for it says that the company may begin boating and the construction of the rail road as soon as three thousand shares shall have been subscribed. It must therefore consider subscriptions good, whether five dollars a'share has been paid on them or not. If so, it follows that the company have the right to collect such subscriptions; and if they have the right to collect them, they have, as an incident, the right to give terms on which the subscribers may pay them; or, at least, they have the right to secure their collection by taking promissory notes for their payment. If the subscription is good, the note is good — for the note is only to secure the subscription.

Suppose, after subscribing, a subscriber refuses to pay the five dollars a share ? Is the company powerless ? Is the company to lose the subscription ? Cannot the company enforcé the subscription? Wherefore is it, that the company can enforce subsequent instalments of stock, if it cannot enforce the first one ?

And there is not the same reason why the payment of the stock, or some part of it, in a rail road corporation, should be made a condition precedent to the corporation’s going into operation, that there is why the payment of the stock, or some part of it, in a banking corporation, should be made a condition precedent to such a corporation’s going into operation. If a corporation of the latter sort fails, the public suffers — if one of the former sort, only the stockholders. This, at least, is generally true.

The last two assignments of error are, with respect to the effect of the alteration of the charter on Mitchell’s liability. The effect of the alteration on that, has already been considered.

Upon the whole, we think there should be a general affirmance of the decisions of the Court below.