Auburn Bolt & Nut Works v. Shultz

22 A. 904, 143 Pa. 256, 1891 Pa. LEXIS 921

• Court: Supreme Court of Pennsylvania
• Decided: October 5, 1891
• Docket: No. 211
• Status: Published

Opinion

Opinion,

Mr. Justice McCollum:

It is too late to object that there was no evidence that Shultz gave notice to the appellant company before the fifth of April, 1887, of his intention to withdraw from it. The point was not made in the court below, but on the contrary Jhe company requested the court to charge the jury: “ That if the defendant failed to give notice to the company of his intention to withdraw from the same before the fifth day of April, A. D. 1887, when the articles of incorporation were ready to file with the secretary of the commonwealth, his subscription to pay became absolute and binding upon him.” This point was a plain concession by the company that the time of the notice of an intention to withdraw from it, was material, and that the question whether the notice was given before the fifth of April was for the jury. An unqualified affirmance of the point was refused expressly on the ground that it left out of view the action of the stockholders, in changing the location of the plant without the consent of the appellee; but the learned judge, in answering the point, charged that a withdrawal after the fifth of April'would not excuse him from paying his subscription. So far as the request pertained to the submission of the question whether the appellee gave notice before the fifth of April of his intention to withdraw from the company, it was complied with. After this request and the answer thereto, the complaint of the appellant that the question was submitted without evidence, will not be considered. A party who solicits and obtains an instruction from the trial judge will not be permitted to allege here that there was no evidence to justify it: Fisher v. Farley, 23 Pa. 501.

The learned judge was clearly right in holding that the appellee might sever his connection with the company and withdraw his subscription at any time prior to the fifth of April, 1887, that being the date it was ready to file its articles in the office of the secretary of the commonwealth. “ Where a corporation is formed, or attempted to be formed, under general statutes, the inchoate proceedings do not ripen into a corporation, until all the requirements of the statute, even to the filing of the articles in the office of the secretary of state, are complied with. Until this is done, a subscription to the articles is a mere proposition to take the number of shares specified of the capital stock of the company thereafter to be formed, and is not a binding promise to pay. The obligation is inchoate merely, and can never become of force unless the corporation goes into effect in the mode pointed out by the statute: ” Thompson’s Liability of Stockholders, § 120. In Muncy Traction Engine Co. v. DeLa Green, 12 Cent. R. 386,

* it was held that a subscriber to the stock of a proposed corporation may withdraw his subscription at any time before application for a charter. The case cited was determined in this court in 1888, but the doctrine of it is familiar and has recognition in many of our preceding decisions: Phipps v. Jones, 20 Pa. 260; Edinboro’ Academy v. Robinson, 37 Pa. 210; Strasburg R. Co. v. Echternacht, 21 Pa. 220; Shober v. Park Ass’n, 68 Pa. 429; Garrett v. Railroad Co., 78 Pa. 465.

The appellee’s subscription was “ for the purpose of erecting a nut and bolt manufactory in the borough of Auburn, Pa.,” and the charter of the appellant company provides that its business shall be transacted in that place. It appears that the company has built its manufactory in an adjoining township, and carries on its business there, and it is conceded that it will not erect a manufactory in the borough of Auburn, as proposed in the subscription and charter. In the face of this showing and concession can the corporation enforce payment of the subscription ? The obvious inducement to the subscription was the establishment of a manufacturing plant in the borough of Auburn, and that was its plainly declared purpose. It would be in direct violation of the terms of his contract, and unconscionable, to compel the subscriber to pay for the erection of a like plant in another locality. The selection of a site within the borough limits was within the power of the corporation under the subscription and charter, but it was not authorized by either to locate its manufactory in an adjoining township, and to require its objecting subscribers to pay for it. A material change in the route of a railway company has been held sufficient to discharge a subscriber: Thompson’s Liability of Stockholders, § 188, and cases cited. It is involved in the nature of a subscription to the stock of a company to construct a road from one place to another, that the termini are part of the contract, and if the company procure an act of assembly altering the termini of the road, the subscriptions are no longer binding: Plankroad Co. v. Arndt, 31 Pa. 317; Cross v. Railway Co., 90 Pa. 392. So, in our case, when the corporation erected its manufactory in an adjoining township without the consent of the appellee, he had the right to consider the enterprise to which he had bound himself as abandoned and his contract at an end. As he has neither expressly nor impliedly waived this defence, we think he may rely on it as a sufficient answer to this action. The specifications of error are dismissed and

The judgment is affirmed.

Now reported, by direction, post, 269.