Smith v. Silver Valley Mining Co.

Miller, J., delivered the opinion of the Court. The charter of the “ Silver Valley Mining Company” was granted by the Legislature of North Carolina by an Act whi ch was ratified on the 15th of February, 1861. The title of this statute is “An Act to incorporate the Silver Valley Mining Company, in the County of Davidson.” By the. first section it is enacted that five named persons and “ their associates, successors, and assigns, be and they are hereby created and constituted a body politic and corporate, by the name and style of the Silver Valley Min ⁸⁷ ing Company, for the purpose of working, mining, and exploring for silver, gold, copper, iron and all other metals and minerals, and for mining, rending, smelting and working the same, and by that name may sue and be sued.” “May have a common seal, and may enjoy all the privileges and powers incident to mining or smelting corporations, and may also purchase, hold and convey any real or personal property or estate as capital stock, to the amount of one million of dollars.” The second section provides “ that the said corporation may divide their stock into such number of shares, and may provide for the sale and transfer thereof in such manner and form as said corporation shall from time to time deem expedient, and may levy and collect assessments, forfeit and sell delinquent shares, declare and pay dividends on the shares, and may make, alter and repeal such by-laws and regulations as said corporation may deem necessary, not repugnant to the laws of this (átate and of the United States.” The third section makes it “ lawful for the said corporation to be managed by three or five directors, two of whom at least shall be residents of this State, who shall have power to fill vacancies in their own body, shall continue in office until others are elected or appointed, and shall exercise all such rights as by this Act are conferred and granted; but the stockholders shall have the right to elect said directors annually.” By the other sections it is enacted that the aforesaid five named corporators “shall manage the affairs of said corporation as directors until others are elected or appointed,” that the “ corporation shall exist for thirty years, and that this Act shall bo in force from and after its ratification.” The appellant by his bill in this case filed in February, 1880, avers that in March, 1869, he became the holder of a certificate which justly and legally entitled him to the ownership of 1800 shares of the capital stock of this cor ⁸⁸ poration, each of greater value than one dollar, and his complaint is that at a meeting of the directors held in Baltimore in February, 1879, a resolution was passed imposing an assessment of two cents a share, and declaring that if this was not paid before the 31st of March following, the stock on which it was not paid should be forfeited to the corporation and sold for its benefit, and that his stock was under this assessment declared forfeited, and the form of a sale thereof had. He charges that the directors had no right to hold a meeting for this purpose out of the State of North Carolina, and that their proceedings in the premises were wholly void ; that he had no notice of the proceedings of this meeting until many months afterwards, though he was and has been for many years a resident of Baltimore, and that the directors and other authorities of the corporation did not wish their said proceedings to be known by him; that no suitable or effective means were taken to give notice thereof even by advertisement in the public papers, the same having been, as he is informed, published in a paper which he does not take and very seldom sees ; that the pretended sale of his stock was made to Wilkins, the president, and Denison, the treasurer of the corporation, and that these pretended proceedings of forfeiture were carried out by their influence, co-operating with other persons who are unknown to .him; that shortly after these proceedings came to his knowledge, he made, through his counsel, a formal tender to the president of the amount of the assessment with interest thereon, and demanded to be reinstated in the possession and enjoyment of his stock, but this demand was refused; that all these proceedings purporting to forfeit his stock are merely illusory, have been carried out for the benefit of Wilkins and Denison, officers of the corporation as aforesaid, and that they aré not only void in law by reason of holding the meeting beyond the limits of the State which granted the charter, and by reason of the ⁸⁹ attempt to deprive him of his property without notice in contravention of the first principles of justice, and of the organic law of the State of North Carolina, as it existed at the time this corporation was chartered, but that they are by reason of the facts above stated, inequitable, unjust and in fraud of his rights.

The bill then prays that the company and Wilkins and Denison may severally answer under oath, and set forth explicitly and fully the proceedings whereof the forfeiture of his stock is alleged to have occurred, and may discover when, by whom, and to whom it was sold and at what price, who is now the holder or ostensible holder thereof, and for whose benefit and interest the same is held, why they did not give greater publicity to their said proceedings, and the names of the persons who combined and cooperated with them in the formation and consummation of the "attempt to forfeit his stock, if any such persons there be, and to whose benefit the supposed forfeiture and sale have enured; that these proceedings of the corporation may be declared to be null and void, that the supposed forfeiture and sale may be annulled, that he may be reinstated in the possession and enjoyment of his said stock, that the said company and Wilkins and Denison may be forever enjoined and prohibited from setting up this supposed forfeiture, and from claiming any benefit therefrom, and that he may have full and fair compensation from them on account of the premises, and for general relief. All the defendants filed a demurrer to the bill, which was overruled. They then filed separate answers in which they put the complainant upon proof of his ownership of stock, deny all the charges of combination or fraud, set out the proceedings under which the forfeiture and sale were made, and insist that the same were duly and lawfully conducted, and are legal and valid. Proof was then taken, and upon the hearing the Court below passed a ⁹⁰ decree dismissing the bill, and from that decree this appeal is taken.

It thus appears that one of the grounds upon which the bill assails the validity of the forfeiture, is that the meeting of the directors at which the proceedings to that end were adopted, was not held within the limits of the sovereignty granting the charter, but another question is presented, and this goes to the corporate existence of this company at the time the appellant became a holder of its stock. The mere grant of a charter like this, where it does not appear upon the face of the incorporating Act, or otherwise, that the named corporators applied for it, does not create the corporate body. Something more must he done. There must be at least an acceptance of the grant hy a majority of the corporators, before corporate life and existence can begin.

Angell & Ames on Corp., (11 Ed.,) sec. 81; Morawetz on Private Corp., secs. 14, 17; Boone on Corp., sec. 23. Nor is this a case in which acceptance is to be presumed or inferred from the assumption and exercise of the corporate powers, for the proof clearly shows, when, where, and how this charter was accepted. The testimony is explicit and without contradiction, that the named corporators held their first meeting in the City of Baltimore on the 5th of March, 1861, less than a month after the passage of the Act, and .that on the next day (March 6th, 1861,) they accepted the charter at a meeting held by them at the same place. It also appears that, at the same time or shortly thereafter, they elected a president, secretary and treasurer, adopted a seal, determined upon the number and par value of the