McMillan v. Maysville & Lexington Railroad , 54 Ky. 218 ( 1854 )

Judge Simpson

delivered the opinion of the Court—

The obligors, among whom the appellant was one, agreed to pay to the Maysville and Lexington Railroad Company $50 on each share of stock, subscribed by them, upon condition that said road should be so located and constructed as to make the town of Carlisle a point, otherwise the subscriptions were to be null and void. Now this stock was to be paid only upon the condition that the road should be so located and constructed as to make the town of Car-lisle a point. But when was it to be paid? The appellant contends that it was not to be paid until the road was finished, and that such is the meaning of the stipulation that the road should beso located and constructed as make the town of Carlisle a point, otherwise the subscriptions were to be null and void.

The place and not the extent of the construction of the road was evidently referred to in this stipulation. The stock was to be paid, if the road was so con-, structed as to make the town of Carlisle a point, not when the construction of the road should be completed. But the writing itself fixes the time of payment. By it the subscribers agreed to pay the stock subscribed by them, in such installments, and at such times as might be required by the board of directors of said company. In giving construction to the instrument the whole of it must be considered. Now it is evident, looking to all the stipulations contained in it, that the entire construction of the road was not understood or intended by the parties to be a precedent condition to the payment of the stock. The construction, and payment of the stock, were to be coneurrent acts. No payment was to be made unless the road was so constructed as to make the town of Carlisle a point, but if it were constructed in that manner, the payment was to be made, at such time and place as the board of directors might designate.

2. In the construction ofcontracts, the object and purpose of the parties is to be considered, and such a construction given as wiil carry the intention into effect. In this case the object and intent of the parties was to use the fund in the construction of the road. 3. Under the provisions (Session Acts of 1849-50, section 24,) the President and Directors of the Maysville and Lexington Railroad Company had a right to make a conditional sale of the stock to the subscribers. The subscribers did not become stockholders until they performed the condition on which their subscriptions were made.

But if, instead of restricting ourselves to the letter of the instrument, to ascertain its true meaning, we take into consideration the object tobe accomplished by the subscription, the nature and extent of the enterprize in which the parties were embarking, and the means by which it was to be effected, no difficulty can exist in determining the intention of the parties, or in giving such an exposition to the writing as will be consistent with it. The stock was subscribed for the very purpose of aiding in the construction of the road. To effect this obj ect it must be paid as the work progresses. The postponement of its payment, until the work should be finished, is inconsistent with the very end to be accomplished by it. No road could ever be made on this principle, and therefore it cannot be supposed that these stockholders could have intended that the payment of the stock subscribed by them should not be made until the work had been completed. They desired to make the town of Carlisle a point in the road, and the payment of their stock was made to depend upon that condition. The road has been so located as to effect that object, and it is incumbent on them, according to any fair interpretation of their agreement, to pay the stock subscribed by them, to aid in its construction.

It is also contended, on the part of the appellant, that the agreement sued on is void, on the ground that the company had no authority under their charter to receive any but unconditional subscriptions of stock.

By the 24th section of the charter, (Session Acts, 1849-50, page 302,) the president and directors were authorized to sell or dispose of the unsubscribed stock for the benefit of the company. The only limit on this power was that the stock should not be disposed of under its par value. The right to make a conditional disposition of the stock seems to be unquestionable, under this provision in the charter. The substance of the agreement of the company, and the signers of the instrument of writing sued upon was, that if the former would locate the road so as to make the town of Carlisle a point, the latter would take the amount of stock subscribed by them. When the road was thus located, the signers became unconditional stockholders, and as such were entitled to all the corporate rights and privileges of members of the company. The stock itself was not conditional; it was only the agreement to take it that was conditional. The subscribers were not stockholders until the company had performed the condition upon which their undertaking depended, and when that was done, they became stockholders by force of the agreement of the parties. The acquisition of stock in this manner was in our opinion sanctioned by the foregoing section of the charter, and does not seem to be prohibited by sound policy, or by any of the other provisions in the statute. Besides it has been usual under similar charters to make contracts of this kind, which fact, although insufficient of itself to give validity to such subscriptions of stock, may very properly be referred to for the purpose of showing the cotemporaneous construction which has been given to charters containing similar provisions.

4. The failure of the company to complete the Maysville and Lexington Railroad did not have the effect to release subscribers for stock from the payment of their subscript ions. They / may be necessary to pay debts incurred

The other matters of defense set up and relied upon in the answer are obviously untenable. The fact that the company have suspended operations upon the road, and that it will require a large additional expenditure of labor and money to complete its construction, and even the additional fact that the means of the company are wholly inadequate to the accomplishment of this object, do not furnish any sufficient reason why the defendant should not pay his stock. It may be, and probably is necessary, to aid in the payment of debts already incurred in the work previously done upon the road, or it may be required for the purpose of assisting in its further prosecution. The defendant could only be absolved from liability for the payment of his stock, by alleging and proving a final abandonment of the work by the company, and also that its payment was not necessary for the purpose of satisfying any existing demand against the corporation.

Wherefore, the judgment is affirmed.