Odd Fellows' Hall Co. v. Glazier

5 Del. 172

• Court: Superior Court of Delaware
• Decided: July 5, 1849
• Status: Published

Opinion

By the Court:—

Booth, Chief Justice.

Where a person is under a legal obligation to pay a sum oí money by virtue of a statute, the law implies a promise or contract on his part, to make the .payment.; and if the statute prescribes no form of action, or other remedy, a recovery may be had by an action of debt or assumpsit. The question in this case is, whether the legal obligation or personal liability 'exists on the part of the defendant, to pay.the instalments called,-and.remaining unpaid, on the twenty-one shares of stock which he subscribed for. This is to be determined by the act incorporating the Odd Fellows’ Hall Company of Wilmington. The.sixth section requires the payment of one dollar to the commissioners, before the organization of the corporation; and after the organization, it requires payment to be made to the treasurer, of such instalments, and at such times as the board of- directors may order. In case of failure to pay the instalments at the time appointed, the board of direction is authorized to declare the amount previously paid by the defaulting party, and the stock held by him to be forfeited; and to direct the treasurer to dispose of such stock to other persons. This is the only remedy prescribed by the act to enforce the payment of instalments. No power is given to the corporation to institute suits against delinquent stockholders and thus, to make them personally responsible. The unpaid instalments are a charge upon the stock; but not a personal charge upon the stockholders. This consideration, probably, was an inducement on the part of this defendant, and other stockholders, to subscribe for the stock. A person may be willing to embark in an undertaking authorized by an act of incorporation, when he observes by the terms of the act, that the only risk which he incurs, will be the forfeiture of his stock and the instalments he pays; but may be very unwilling, and might refuse, to become a member of a corporation, where the act makes him personally liable for the whole amount of the shares of stock, for which he becomes a member. The power to forfeit the shares of stock and the amount paid on them, must have been deemed by the Legislature, a sufficient remedy on behalf of the Odd Fellows’ Hall Company, to enforce payment of the instalments. As a corporation can exercise no powers except those granted by the act of incorporation, and such as are the common law incidents to every body politic, the plaintiffs in this case, have no authority to institute suits against delinquent stockholders, to recover unpaid instalments; because no such authority-is conferred by the charter. Had the power been given, the stockholders would be personally liable, and under a legal obligation to pay. And if the corporation in such case, should elect to sue, instead of forfeiting the shares, the action would be maintainable upon the promise or contract implied by law. But in the case before the court, as the act of incorporation gives no authority to sue stockholders for unpaid instalments; they should, if it was intended to make them personally liable, have been required, when they subscribed for the stock, to sign a written promise or contract to pay the instalments on their several shares, at such times as they should be called for, or demanded. Such a written contract or promise, although the charter is silent on the subject, would be legal; upon the principle, that every corporation has .the power to make contracts to effect the purposes and objects-for which the corporation was created. The written agreement of November 22, A. D., 1847, signed by the defendant and others, contains neither an ex press nor an implied promise to pay the instalments on the shares taken by them. It-is merely an engagement to take the number of shares prefixed to their respective names. By signing it, they became members of the corporation, subject only to such liabilities as the act of incorporation imposes. The written agreement cannot receive any other fair or reasonable construction.

As there is no express or implied promise on the part of the defendant to pay the instalments called for, this action cannot be maintained.

Judgment for defendant.