Morrison v. Dorsey

Robinson, J., delivered the opinion of the Court. This suit is brought by the appellants, receivers of the Chesapeake Mutual Land and Building Association of Baltimore City, to recover of the appellee, certain unpaid instalments on his subscription to. the capital stock of said company. Besides the money counts, the declaration alleges, that the defendant agreed to take five shares of the stock of the Association, and to pay therefor in weekly instalments of one dollar per share in each and every week until the whole amount due on said subscription was paid. To support this count in the declaration, the plaintiffs offered in evidence a by-law of the Association, which provides that il Each member shall pay an entrance fee of fifty cents per share on each share of stock he subscribes for, and a weekly instalment of one dollar per share.” ⁴⁷¹ The appellee contends, that the by-law relied on by the appellants was never ratified or confirmed at a general meeting of tbe Association duly called for that purpose, as required by sec. 50, of the Act of 1868, ch. 471, under which the Association was incorporated.

It appears that the by-laws were drawn up by a committee appointed by subscribers to the stock of the proposed Association before its incorporation ; that they were adopted at a meeting of said subscribers held March 16th, 1869, and they were printed — that the certificate of incorporation was acknowledged and recorded on the 6th of April following — that from the time of its incorporation to the time when the appellants were appointed receivers, a period of over five years, the Association was actively engaged in the prosecution of its business, by making contracts for land and leasing and otherwise disposing of the same ; that during all this time it acted under these, and had not in fact any other by-laws ; — that in September, 1871, amendments making important changes in the laws of the corporation were proposed, and afterwards adopted by the directors, and these amendments were submitted to the stockholders at a general meeting, and were by them ratified and approved. It also appears, that the name of the appellee was entered by the secretary of the Association, in the stock-ledger, for five shares of stock, upon which the appellee paid the weekly instalment of one dollar per share, and also the entrance fee of fifty cents per share ; that at the time of such payment, a book containing the by-laws was delivered to tbe appellee, which being lost, another was substituted in its place, and this one being produced at the trial, contained the receipts of the weekly instalments paid by the appellee, and that in 1874, the appellee subscribed his name to the by-laws, after being told they were the bylaws of the corporation. It also appears, from the time of his subscription up to the time when the appellants ⁴⁷² were appointed receivers, he not only paid the weekly instalments due on his subscription, but also shared the profits earned by the Association. Under such facts as these, the question is not whether the by-laws were adopted in strict conformity with sec. 50, of the Act of 1868, but whether in a suit by the appellants as receivers, representing the Association and its creditors, to recover the balance due on his subscription, the appellee can rely on such a defence.

And we think it is clear both on principle and on authority that he cannot. He has in every mode and manner recognized and admitted the validity of the by-laws under which the Association acted