Frank v. Morrison

Miller, J., delivered the opinion of the Court. In this case an action of assumpsit was brought on the 18th of March, 1879, by the Eeceivers of the “ Franklin Land and Loan Company of Baltimore City ” to recover from the appellant certain unpaid instalments on his subscription for stock. The declaration contains a special count, charging that prior to the 1st of April, 1876, the defendant subscribed for and agreed to take five shares of the stock of said company, and to pay $400 per share therefor, in weekly instalments of one dollar on each share until paid in full, and that he has failed to pay such instalments for more than one hundred and fifty weeks last past. It is agreed that most of the questions presented by the rulings of the Court upon the several instructions offered on both sides have been settled by the decisions of this Court in the cases of these same Receivers against Dorsey, 48 Md., 461 , against Musgrave, 54 Md., and against Rider, 54 Md. Practically, the only question now open is, whether the Statute of Limitations is a bar to the action ?

And as to this, it is conceded that if the contract set out in the declaration to pay for the shares, in weekly instalments of one dollar per share, is to be treated as the real contract between the corporation and the subscriber, the Statute does not apply. The proof in the case shows the name of the defendant, as a subscriber for five shares, was written on its Stock Ledger by the company’s secretary, and as he believes, though he has no distinct recollection •on the subject, by the defendant’s direction. This ledger is simply headed “ Franklin Land and Loan Company of Baltimore City,” and in one column are set out the names •of the subscribers, in another the number of shares opposite each name, and in others the weekly payments of dues, interest and fines made by each. The name of the •defendant, as a subscriber for five shares, seems to have been thus entered about the 16th of February, 1871.

On ⁴⁰⁶ that day he made his first payment of $7.75, being five dollars for dues or the first instalment of one dollar per share on his stock, two dollars and a half for an entrance fee, and twenty-five cents for a small hook then given him, in which were subsequently entered the weekly payments made on his five shares. This hook contained also the printed by-laws of the company, one of which is to the effect that the capital stock of the company shall he $400,000, divided into one thousand shares of the par value of $400 each, payable in weekly instalments of one dollar per share until the whole is paid. It was customary to give a similar hook to all subscribers, and the defendant having received his, he continued to pay, and had entered therein his weekly instalments on the five shares, up to the 4th of June, 1874, making in all $927.65, and then stopped paying. During that time he also received and receipted for dividends on his stock, which the company declared each year.

Now in order to let in the Statute of Limitations it has been argued with much ingenuity by the appellant’s counsel that this must he treated as a contract to pay for the stock in full within two years, as provided by the Act of 1868, ch. 471, sec. 59. The argument, briefly stated, is that this company was incorporated under this Act of 1868; that by sec. 59, of that Act it is required that the capital stock of every corporation shall all he paid in-one-half in one year, and the other half in two years from and after its incorporation; that by sec. 50 of the same Act a corporation has authority to adopt such bylaws only as are not inconsistent with law; and as a by-law which authorizes, as in this case, the stock to he paid up after a longer period than two years is inconsistent with sec. 59, it is therefore void; that although in a suit by receivers representing creditors a subscriber will not ■he permitted to say such a subscription is void, still it must he held that sec. 59, formed part of the contract of sub ⁴⁰⁷ scription, and the by-law being void, it must be treated and construed as a contract to pay within two years under this section; and the conclusion which is irresistible from the premises, is that the receivers had the right to collect the entire balance when they demanded payment in October, 1875, and the defendant denied his liability, and as this suit was brought more than three years thereafter the claim is barred by limitations. But it seems to us that the validity of the by-law has nothing to do with the question. The facts above stated, place it beyond doubt that the contract