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sary proceed upon the quite reasonable, if not the sounder, doctrine, that when facts or circumstances upon which the performance of a contract depends lie more particularly within the knowledge of one party than another, it is the duty of the party possessing the knowledge to impart it to the others.1

§ 562. Waiver of irregularities.-No doubt a party may so far participate in the act of levying an assessment or in the enjoyment of its benefits as to estop him from setting up in defence want of notice or lack of authority in those making it. Thus he may waive the implied. condition in his contract that the entire capital stock shall be subscribed before being liable to contribute, by attending meetings and voting to begin operations. requiring the expenditure of money. Such acts as these could only be done upon the assumption that the capital of the company had been fully subscribed.2

1 Wear v. Jacksonville, etc., R. R. Co., 24 Ill. 593; Spangler v. Ind. & Ill. Cent. R. R. Co., 21 Ill. 276; Carlisle v. Cahawba & Marion R. R. Co., 4 Ala. (N. S.) 70; Scarlet v. Academy of Music, 43 Md. 203; Essex Bridge Co. v. Tuttle, 2 Vt. 293; Rutland & Burlington R. R. Co. v. Thrall, 35 Vt. 536; Miles v. Baugh, 3 Q. B. 845; Edinburgh, etc., Ry. Co. v. Hobble white, 6 M. & W. 707; Alabama & Fla. R. R. Co. v. Rowley, 9 Fla. 508; Hughes v. Antietam Mfg. Co., 34 Md. 316.

2 Hager v. Cleveland, 36 Md. 476; Cabot, etc., Bridge Co. v. Chapin, 6 Cush. 53; Bucksport, etc., R. R. Co. v. Buck, 68 Me. 81; Hughes v. Antietam Mfg. Co., 34 Md. 328, 329; New Hampshire Cent. R. R. Co. v. Johnson, 30 N. H. 407. Contra, Old Town, etc., R. R. Co. v. Veazie, 39 Me. 571; Hale v. Sanborn, 16 Neb. 1; 20 N. 97. A subscriber does not waive the defence that the full capital stock has not been subscribed by once attending a stockholders' meeting, and paying part of his subscription, in ignorance of the fact that the stock had not all been taken. Orynski v. Loustaunan (Tex.), 15 S. W. 674.

A shareholder was sued for the amount of ten calls. It appeared that on receiving notice of the second call, he addressed a notice to the secretary and denied being a stockholder, and all knowledge of having subscribed. It was held that this distinct repudiation of his contract was a waiver of all notice, and that it was no longer necessary to give him notice of calls, that his express repudiation operated in all respects as if the notices had been regularly given, and that he was liable in the action. Cass v. Pittsburgh, etc., Ry. Co., 80 Pa. A building and loan association which demands, as a condition of

St. 31,

38.

The same rule will apply to parties who participate in corporate meetings and vote for expenditures before the proportion required by statutes to be raised before making assessment has, in fact, been subscribed.1

§ 563. Defenses to calls.-An unconditional contract,. or one the condition of which has been performed, and a call made and presented in conformity with law or the terms of the contract, and by officers authorized. to make it, having been stated as the prime essentials of the subscriber's liability to pay, but little need be said concerning the available defences to demands of this character.2

the withdrawal of a borrowing stockholder, a greater sum than that due to it, and which persists in such demand after its attention has been called to the error, is in no position to urge that the stockholder has lost his right to withdraw by his non-action for several years thereafter, where he offered to pay the amount actually due the association at the time of his proposed withdrawal, and has been ready and willing to settle on that basis ever since. People's Building & Loan Ass'n v. Furey (N. J.), 20 A. 890.

1 Willamette Freighting Co. v. Stamus, 4 Or. 261. See also Hays v. Pittsburgh, etc., R. R. Co., 38 Pa. St. 90, 91; Kansas City Hotel Co. v. Harris, 51 Mo. 464; Schenectady, etc., Plank Road Co. v. Thatcher, 11 N. Y. 102; Danbury, etc., R. R. Co. v. Wilson, 22 Conn. 436; Winter v. Muscogee, R. R. Co., 11 Ga. 438.

That other subscribers have Mason & Augusta R. R. Co. v. making the call; Budd v. MultThat under the act of incorpo

2 The following objections have been held unavailing as defences to calls for unpaid capital:-That the charter was obtained in bad faith; Peychaud v. Love, 24 La. Ann. 404; Garrett v. Dillsburg & M. R. R. Co., 78 Pa. St. 465; Smith v. Heindecker, 39 Mo. 157. That a suing auditor is also a director of the corporation; Chouteau Ins. Co. v. Floyd, 74 Mo. 286. paid their subscriptions in Confederate money; Vason, 57 Ga. 314. That no necessity existed for nomah, St. Ry. Co., 15 Or. 404, 413; 15 P. 659. ration the company might have carried on other business than that in which it actually engaged; Haskell v. Worthington, 94 Mo. 560; 7 S. W. 481. That no certificate had been issued; Astoria & S. C. R. Co. v. Hill (Or.), 25 P. 379; that another subscriber has paid by note instead of with cash as required by the charter; Little v. O'Brien, 9 Mass. 423. That the promoters sold to the corporation a patent right at an overvaluation; Dorris v. French, 4 Hun, 292. That the officers were illegally elected trustees; Vernon v. Hills, 6 Cow. 23; or that they are not stockholders as required by statute. Ross v. Bank, 20 Nev. 191; 19 Pac. Rep. 243. That an illegal by-law prevents his voting until calls are paid; Chandler v. Northern Cross, R. R. Co., 18 Ill. 190. That the officers have refused to show the stockholder its bills and vouchers upon demand as required

Unpaid subscriptions, prior to a call being made for them, are not even contingent debts and liabilities within the meaning of the late bankrupt act, and therefore not a provable debt against the estate of the bankrupt; and it was held that a discharge in bankruptcy did not bar an action to enforce the stockholder's liability for a call subsequently made. But notwithstanding the construction of the bankrupt act, there is no doubt that unpaid capital in the hands of subscribers, whether calls have been issued for the same or not, is a debt which may be enforced in favor of creditors, in case of the corporation's actual insolvency, whether

by statute; Burnham v. S. E. Fuse Mfg. Co., 76 Cal. 24; 17 P. 940. That by the charter the whole capital stock should have been paid in before the commencement of business, and that this was not done; Mc Dermot v. Dongan, 44 Mo. 85. Or that the corporation has been ousted from its franchises; Graff v. Flesher, 33 O. St. 107; Rowland v. Meadow Fur. Co., 38 O. St. 269. And any irregularity, which if taken advantage of in due time and manner would have constituted a good defence, may be waived either expressly or by any act indicating a clear intent to do so. By paying calls without raising the objection; Miss. & Tenn. R. R. Co. v. Harris, 36 Miss. 17; Inter. Mt. P. Co. v. Jack, 5 Mont. 568; 6 Pac. Rep. 20; Hamilton v. Grangers, L. & H. Ins. Co., 67 Ga. 145. By other acts from which waiver was presumed; May v. Memphis Br. R. R. Co., 48 Ga. 109; Middlesex Tp. Co. v. Seman, 10 Mass. 385; McCully v. Pittsburgh, etc., R. R. Co., 32 Pa. St. 25.

But in a case which came before the supreme court of Penn., where it appeared that a railroad company had abandoned the construction of its road, had released some of its members and refunded the money they had paid, it was held that every member was thereby discharged from liability to pay further calls. McCully v. Pittsburg, etc., R. R. Co., 32 Pa. St. 32, and since assessments must bear ratably upon all shareholders alike, no one would be bound to respond to an assessment which discriminated between them and was more favorable to some than to others. Pike v. Bangor, etc., R. R. Co., 68 Me. 445.

1 Glenn v. Howard, 65 Md. 40; 3 R. 895.

2 Sayre v. Glenn, 87 Ala. 630; 6 So. 45; 26 Am. & Eng. Cor. Cas. 337. The court said: "The demand we may ask would thus be one whose existence would depend upon a contingency rather than one that existed already with a right of action on it depending on such contingency." An action brought subsequently to the discharge in bankruptcy and based upon the unpaid subscription could not be defended on the ground of such discharge. Railroad Co. v. Burnside, 5 Exch. 129, which has since been followed by the English courts. See also Glenn v. Clabaugh, 65 Md. 65; 3 A. 902; Riggin v. Magwire, 15 Wall. 549; Steele v. Graves, 68 Ala. 21.

under winding-up proceedings, or by separate action, both at common law and under the provisions of the various state insolvency laws.1 In case of a state of affairs not amounting to actual insolvency, but which renders it necessary, as where directors persistently refuse to call in the subscriptions, courts of equity will compel them to make calls upon application of creditors.2

§ 564. Non-payment of percentage. The weight of authority is to the effect that a subscriber for capital stock cannot defeat an action on the contract of subscription by showing that he never paid the percentage required by the charter or statute to be paid at the time of subscribing. An attempt thus to escape liability has been characterized as a most ungracious defence, which should not be allowed unless it is strictly required by some inflexible rule of law. The defence is good where the requirement, with respect to obtaining the entire capital stock, is provided for in the subscription itself; but not where the subscriber was one of the commissioners to raise the preliminary subscription.5

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2 Germantown Pass. Ry. Co. v. Fitler, 60 Pa. St. 124. See also, Queen v. Victoria Park Co., 1 Ad. & El. (N. S.) 544; Queen v. Ledyard, Id. 616; King v. Katherine Duck Co., 4 Barn & Ad. 360; Dalton & M. R. R. Co. v. McDaniel, 56 Ga. 191. In these cases a mandamus was refused because the remedy in equity was more complete and justice would be thereby better administered. To same effect is Hatch v. Dana, 101 U. S. 205, and Ward v. Griswoldville Mfg. Co., 16 Conn. 593.

Ill. River R. R. Co. v. Zimmer, 20 Ill. 654; Haywood & P. R. R. Co. v. Bryan, 6 Jones' L. (N. C.) 82, the court say:-"It would be a strange rule which would allow him to take advantage of the other stockholders' forbearance and his own neglect." See also Pittsburgh W. & K. R. R. Co. v. Applegate, 21 W. Va. 172; Minn. & St. Louis Ry. Co. v. Bassett, 20 Minn. 535.

4 Water Valley Mfg. Co. v. Seaman, 53 Miss. 655.

5 Rider v. Alton & S. R. Co., 13 Ill. 516. See also, Vicksburg, S. & T. R. R. Co. v. McKean, 12 La. Ann. 638; Wright v. Shelby, R. R. Co., 16 B. Monr. (Ky.) 4; Smith v. Plank Road Co., 30 Ala. 650; Mitchell v. Rome R. R. Co., 17 Ga. 574; Henry v. Vermilion, A. R. R. Co., 17 O. St. 191; Chamberlain v. Painesville & H. R. R. Co., 15 O. St. 225; Napier v. Poe, 12 Ga. 170; Fisher v. Miss. & Tenn. R. R. Co., 32 Miss. 359.

Such requirement of the statute or charter is complied with where the amount of percentage paid in advance aggregates the required sum, as where a few subscribers paid in more than their percentage, and enough to make up for those not paying. Where the percentage was "payable" the court said:-That "this merely made it due and collectible like a call "; 2 but where the requirement is mandatory, as when it is contained in a by-law, the defence is available,3 and in such case the requirement cannot be evaded, as by accepting a check. The defence is also good where it

is provided by statute that in case of failure to raise the prescribed amount the subscriptions shall be "void."5 Subsequent payment of the percentage renders the defence unavailable. In England, such failure to pay the percentage does not affect the liability of the subscriber. It only restricts his right to transfer his stock."

§ 565, Release and cancellation.—It is well settled that a release without unanimous consent before insolvency is no defence.8 But objecting shareholders may be estopped by acquiescence in the cancellation, and such

1 Stuart v. Valley, R. R. Co., 32 Gratt (Va.), 146; Southern L. Ins. Co. v. Lanier, 5 Fla. 110; Selma & Tenn. R. R. Co. v. Roundtree, 7 Ala. (N. S.) 670; Spartansburg & A. R. R. Co. v. Ezell, 14 S. C. 281.

2 Oler v. Baltimore, R. R. Co., 41 Md. 583. See also Ashtabula & N. L. R. R. Co. v. Smith, 15 O. St. 328.

3 Charlotte & S. C. R. R. Co. v. Blakeley, 3 Stroph. Eq. (S. C.) 245; State Ins. Co. v. Redmond, 1 McCrary, 308.

People v. Chambers, 42 Cal. 201; People v. Stockton & V. R. R. Co., 45 Cal. 306.

5 Farmers' & M. Bank v. Nelson, 12 Md. 35; Taggart v. Western Md. R. R. Co., 24 Md. 588; Wood v. Coosa, & C. R. R. Co., 32 Ga. 273.

6 Hall v. Selma & Tenn. R. R. Co., 6 Ala. (N. S.) 741.

7 East Gloucestershire Ry. Co. v. Bartholomew, L. R. 3 Ex. 15; Purdy's Case, 16 W. R. 660; McEwen v. West, L. W. & W. Co., L. R. 6 Ch. 665.

8 Supra, § 314.

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