JAN. TERM, 1857. BOOKER, Ex PARTE. 33£3*] *BOOKER, EX PARTE. proved 8th January, 1851, entitled "an It is now well settled that a private corporation act granting certain powers, etc." (See may be sued by one of its own members, either at Pamph. Acts 1850-1, pages 86-7): that law or in equity, under particular circumstances, some time during the fall of 1852, the or a special state of facts-as where it attempts to complainant, under the charter of the do acts which it is not warranted in doing by its charter; in which case it may be restrained by in-company, subscribed the sum of $500 to junction. the capital stock thereof, and thereby But where a corporation sues a stockholder fnr became, and was a stockholder for that calls upon his subscription to its stock, which it amount; that the design and object of had authority to do, it cannot be restrained by in-the creation and organization of the junction from the collection of the money on the ground of a departure from its charter in reference company were to secure and insure to matters not connected with the suit—as that it the construction ol a railroad in this has done other acts amounting to a breach of its State from a point on the Mississippi chartered privileges. So, where a railroad company obtains judgment river, at or near Gaines' Landing, against one of its stockholders for calls upon his through or near Camden on the Oua-subscription, it cannot be enjoined by a court of chita river, to some point on Red river chancery from enforcing the judgment upon allega-at or near Fulton, thence to some point tions that the work on the road was not progressing in the manner prescribed in the charter, or that the on the boundary line of this State and company contemplated a departure from the route the State of Texas. That after the com-or a change in the termini designated therein. plainant became a stockholder in the Where a subscriber to a public work permits it to company, it was determined by the be carried on, for a length of time, without objection, he will be regarded, in equity, as acquiescing board of directors thereof, chosen under in the acts done, and will not be rellevel from the the charter, that calls upon the stock payment of his subscription on the ground that the subscriptions should be made at certain plan has been changed and the work is of no benefit. periods thereafter; aud the calls upon Petition for a Mandamus. the sum subscribed by the • complainant on the 29th April, 1856, amounted Garland, for the petitioner. to the sum of $270; that he had not HANLY, J. This is an application paid any part or portion of this amount made to this court for a mandamus to up to the 20th October, 1856, when the the judge of the 4th judicial cir-company brought suit therefor, on the cuit, to compel him under the law side of the Hempstead circuit 33941 *provisions of the 5th section of court; that the suit is still pending in the 86th chapter of the Digest, p. 592, that court undetermined; that he has to grant an injunction upon a bill to made no defense thereto, and does not him presented, showing that the Hon. intend so to do, being advised by coun-A. A. Stith, judge of the sixth circuit, sel, as he alleges, that the proper forum was disqualified from acting thereon, for his defense is a court of equity: and having the endorsement of his re-offers to let judgment go against him fusal of such injunction, as required by on the law side of the court, and pro-the statute in such case. poses to waive errors, when such judg-The substance of the bill, so far as it ment is actually rendered. The may be material in the present enquiry, *bill further, in substance, states P340 is, that on the 29th November, 1852, that it is provided by the charter, when the Mississippi, Ouachita and Red the construction of the road is begun, River Railroad Company, were created it shall be commenced simultaneously and constituted a body politic and cor-at its terminus on the Mississippi, and porate, by that name and style, under its crossing of the Ouachita river, pro-and by virtue of the provisions of an gressing at each point in a westerly act of the Legislature of this State, ap-direction; that since the complainant
BOOKER, Ex PARTE. VOL. 18 became a stockholder, the board of chits and Red River Railroad Company directory, in utter disregard of the • was made sole defendant to the [*341 charter, have caused large sums of bill, aud against whom the injunction money to be expended in payment for was prayed to restrain the collection of work and labor done on the road, be-the complainant's stock subscription, tween its commencement on the Mis-either by execution or otherwise, etc. sissippi, and its crossing on the Oua-For the purposes of this application, chita river, instead of proceeding, pari we will consider the allegations of the passu, with the work on that part of bill as not only true, as we are bound the road lying west of the Ouachita to do upon an ex parte proceeding of river, which they have omitted to do; this sort, but sufficiently full and ex-and within the same period the direc-plicit, to the end that we may at once tory have established the line of the reach and dispose of the real merits of road, so that it will not cross Red river the application. at, or near Fulton; but, on the contrary It was a question of serious doubt, thereof, at a point some 15 or 20 miles until comparatively a recent date, distant therefrom, less elig,ible, and whether a private corporation could, clearly one which will cost \ the com-under any circumstances, be sued, pany much more to construct a cross-either at law or in equity, by one of its ing of that stream: that the chief ob-own members. (See Waning v. Ca-ject and main inducement, which tawba Co. 2 Bay (S. C.) R. 109. Cum-operated upon and influenced the com-Itffe v. Manchester & Bolton Canal Co., plainant to become a subscriber to the 1 Myl. & Russ. Ch. R. 131 and note. stock of the company, were to advance Dodge v. TT oolsey. 18 How. (U. S.) R. the country intermediate Fulton on 331.) Red river, and the crossing of the road But it is now well settled that a pri-on the Ouachita river, and if he had not vate corporation may be sued by one confidently believed the requirements of its own members, either at law or iu of the charter, in all their force, would equity, under particular circumstances, have been faithfully and to the letter or a special state of facts. Ang. & Am. carried out by the company, he never Corp., sec 390-1, and the authorities would have subscribed for any portion above cited: also, Pearce v. Patridge, 3 of the stock thereof. The bill further, Met. R. 44. Hill v. Manchester and Sal-in substance, alleges that the company, ford Water Works, 5 Adol. & Ellis R. by omitting to proceed with the work 866.) on the road at the crossing of the Oua-And a special case in which a private chita river in a westerly direction as it corporation may be sued in equity by progressed at the end on the Missis-one of its members, is, when the com-sippi river, and its diversion from Ful-pany attempts to do acts which they ton on Red river to the point 15 or 20 are not empowered to do under the miles distant, operated per se as a vio-acts of the Legislature from which lation of the charter, and as a conse-they derive their authority to act as quence thereof, that the complainant such; and in such case it has been thereby became and was absolved, in holden that a court of chancery may equity, from the payment of his entire restrain them by injunction, from the stock liability, including the amount commission of the threatened and im-sued for, and asked to be enjoined. pending usurpation. (See Ang. & Am. Grand .Tunc-A printed copy of the charter was ex-on Corp., sec. 391; Ware v. Lion Water Co., 1 Myl. & Rus. Ch. R. hibited by reference to the acts of the As-126; Bagshaw v. Eastern Counties sembly for 1854-5. The Mississipi, Oua-Railroad Co., 1 Beav. Ch. R. 1.)
JAN. TERM, 1857. BOOKER, Ex PARTE. In the last case cited, the objection sippi, Ouachita and Red River Rail-was expressly taken on the part of the road Company were not acting beyond corporation, that the corporation ought the powers delegated to them by their not to a party to the suit. But the constitution, when they commenced vice-chancellor, Sir James Wagram, the suit in question, in the Hempstead said he had no hesitation in overruling circuit court, against the complainant the objection; that the acts of the di- for the recovery of his stock indebted-rectors (in diverting the corporate ness due up to that time—this was moneys for a purpose different from strictly within their powers expressly what was originally contemplated, delegated, and, consequently, was 342*] *against the will of a single what they had a right to do under the shareholder) were the acts of the di- charter. If they had a right to sue, as rectors as the representatives of the they evidently had, it follows as a con-company, and as such were the acts of sequence, that they had a right to pur-the company itself, and that the com- sue their remedy to judgment, and pany would not be bound unless it thence to execution and satisfaction, as were a party in its corporate character. incidents of the general power con-See also, Coleman v. Eastern Railway ferred on them to sue: for the right to Co., 10 Beav. Ch. B. 1, to the same sue without the right to enforce judg-point. ment in case of recovery would be no The result of the authorities, there- right at all. fore, clearly is, that a corporation, *The corporation, in the act of [*343 when acting within the scope of, and instituting the suit against the com-in obedience to, the provisions of its plainant to collect the arrearages of constitution, the will of the majority stock calls, were not "proceeding be-duly expressed at a legally constituted yond the limits of their constitution," meeting must govern; yet beyond the and consequently, did not subject limits of the act of incorporation, the themselves to the annoyance of a suit will of a majority cannot make the act by one of their members, which is the valid: and the powers of a court of test instituted by the laws to determine equity may be put in motion at the in- in such cases, when the jurisdiction of stance of a single shareholder, if he a court of equity may he invoked, as can show that the corporation are em- we have already shown by the forego-ploying their statutory powers for the ing propositions and the authorities accomplishment of purposes not within cited jn support of them. the scope of their institution. See As we understand the case made by Ang. & Am. on Corp., sec. 393, note 2, the bill, the complainant rests his and authorities there cited. whole relief prayed for therein, as to Wc will endeavor to apply the fore- the injunction to restrain the corpora-going principles to the ease at hand. tion from suing out execution upon The bill shows, by reference to the the judgment at law, and enforcing the charter, that the company was invested payment thereof, upon the grounds .of with full power and authority to sue a departure from the character by the and be sued, plead atid be impleaded, corporation; in reference to matters not by their proper style and description, connected with the suit at law. in any of the courts of this State, to the The court of chancery is asked to re-same extent and like effect as if they strain the corporation from the com-were a natural person. There can be mission of a lawful act, because, for-no doubt then, and the fact seems to be sooth, it is charged against them that admitted by the bill, that the Missis- they have, on other occasions, done
BOOKER, Ex PARTE. VOL. 18 other acts, which, in the opinion of the there can be no doubt of their personal complainant, amounted to a breach of or individual liability iu the proper ac-the chartered privileges conferred upon tion. The complainant, even though them, or duties imposed on them, by his stock subscription should have been the terms of their constitution. If the paid into the treasury, and thereby acts complained of in the bill, are un- confused or mixed with the general warranted by the charter, the com- funds of the corporation, would never-plainant may, under the law as we theless have the same right as a private have laid it down, proceed against the stockholder to restrain the appropria-corporation. But when? Certainly tion of any portion of the general fund not until they attempt, or are, in the to unauthorized objects, as he would act of diverting the road from its pre- the particular fund paid by him before scribed destination (as it is contended) it became confused or mixed, or after-on Red River, or the means of the wards, if it could be identified. Hence, company, including the stock paid in we say, the bill before us, is defective by the complainant, is attempted to be in not averring and charging, if the appropriated in an unauthorized and facts will warrant it, that not only unwarranted way. To anticipate a were the company threatening to mis-mal or mis-application of the fund apply the funds of the corporation, but sued for before it comes to the hands of that the directors were insolvent and the treasurer of the corporation, and worthless, and that the treasurer was prevent its going into the corporation faithless, and had given no bond with coffers, would be, to our minds, a security, or that the sureties to his bond stretch of chancery power in the exer- with himself were insolvent. Under cise of that faculty peculiar to courts such a showing as this, it is possible a of equity whereby preventive justice is court of chancery might relieve him so administered, which would be unwar- far as to enjoin the collection of the ranted by the precedents or maxims of stock debt, and leave it in the hands of the courts. To stop the funds of the the complainant, provided, he would corporation before they reach the hands secure it to the company, to be retained of the treasurer, where their safe cus- by him as special treasurer of that par-tody is secured by salutary guards, ticular fund, or, in other words, as 344 4 ] *as well for the company, trustee for the stockholders under the whose special custodian he is, as for directions of the chancellor. the individual members of the corpora- There is another aspect in which this tion, whether their interest may be re- case may be considered, which is as garded as consistent or antagonistic to conclusive upon this application as the the company, would be to expose them one we have just disposed of, and we to loss or waste. When its fund is turn to that for the purpose of meeting once in the possession of the treasurer, all the grounds, as far as it is practica-he is made the special bailee or trustee ble or at all convenient, taken by coun-of it, by operation of the law, and is sel in this application. unwarranted in relinquishing it except *The bill is silent as to what [1'345 when appropriated and drawn for as precise time the supposed diversion of the ordinances of the board prescribe. the route of the road from Fulton to If the board should direct their with- the point 15 or 20 miles distant occur-drawal for an unauthorized purpose or red. It is also silent as to the time at object, they do so at their peril, and which the company ceased to progress though the corporation may be liable, with the work on the road, west of its as we have before seen, we apprehend crossing of the Ouachita river. It may
J. TERM, 1857. BOOKER, Ex PARTE. be fairly intended and inferred from priated to the construction of the road the whole ease made by the bill, that *between its commencement [6346 these grievances, if grievances they on the Mississippi, and its crossing of are, have existed from an early period the Ouachita river, as shown by the in the history of the organization and bill. The laying out the road, and its operationu of the company under their diversion from Fulton to a point 15 or charter ; for it is but just to presume 20 miles distant, must have occurred that the company would have laid out more than four years before the first and defined the route of the entire complaint is made by the complain-road, before they would proceed to con- ant in respect to that fact, for we have struct any part of it. If so, it has been no notice of any complaint having holden that a subscriber to a public been made by him until he was sued work, who has permitted it to be car- on his stock subscription. And so it ried on without objection, cannot be may be said in reference to the coin, relieved from the payment of his sub- plaint about the manner in which the scription on the ground that the plan work has progressed, etc. His quies-was changed, and the work is of no cence on these subjects must be re-benefit. See Doane v. Treasurer of garded in equity as acquiesceuce in the Piekaway, TVright's (Ohio) I?. 752. acts of the eorporation in respect to In the case at hand, the bill conclu- them, otherwise the greatest injustice sively shows that the company was in- and injury might be inflicted upon the corporated as far back as November, whole body of stockholders, as well as 1852, about which time the complain- the community at large, who have an ant became one of its stockholders. It interest in the successful prosecution of had proceeded from that time till the road to final completion. April, 1856, making calls (and of course We presume no case can be found in organized) upon the stock subscrip- the books of reports, where a stock-tions, when the calls due on the com- holder in a private corporation has plainant's subscription of $500, been permitted to restrain the collection amounted to the sum of 8270, as of his stock subscription on account of shown by the bill. The calls on the the company having violated their stock subscriptions of the other stock- charter, except in cases where the com-holders must have been iu the same pany, by a vote of a majority, have ob-ratio, showing very clearly that the tained, from the supreme lawmaking company bad absolutely expended or power of the State, a change in the appropriated over one-hali of all the constitution of the company, which is stock subscribed to some object or accepted by a majority, and materially other, not specifically shown, however, affects the interest secured by the orig-by the bill. Why, and how was so inal act of incorporation. And the much money appropriated ? We must relief, in such cases as these, is placed presume, in the absence of an aver- upon the ground, that the acceptance ment to the contrary, that this large under the new act is a surrender of the amount was expended for legitimate old, and consequently, that none are objects, warranted by the charter— bound by the acceptance and surrender, such as paying expenses incident to except those who absolutely assent to the surveying and laying out the road it. For violations of chartered powers, between the termini, not costing, prob- breaches of chartered duties, and en-ably, a twentieth part of the amount croachments upon chartered privileges, received from calls paid in, and the the remedy to the individual affected residue, as it should have been, appro- is remedial and preventive. The first
VoL. 18 by an action at law, or suit in equity, for the grievance already done ; and by injunction for the second, or those impending and threatened. The public may have redress by the appropriate proceeding to resume the franchises, which have been abused. And we are sustained in this conclusion by the very authorities to which we have been 3471 *referred by the complainant; and by a host of others bearing on the same point. See also, Ang. & Am. on Corp., see. 776-7. In every view that we can regard the application, we are forced to refuse the mandamus. Cited : —20 4.31.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.