Williams v. Taylor

Fowler, J., delivered the opinion of the Court. This is an action to recover certain installments of unpaid subscriptions to the stock of the Lexington Development Company, a corporation incorporated under the laws of Virginia. David B. Taylor subscribed to 350 shares of the capital stock of this company in October or November, 1890, and signed the following contract: “I hereby subscribe for 350 shares of the capital stock of ³⁰⁸ the Lexington Development Company of the par value of ten dollars ($10) each, upon the following terms and conditions, as set forth in the prospectus, and agree to pay the same, as follows: One dollar down at the time of subscription, one dollar per share at the call of the Board of Directors and one dollar per share every sixty days thereafter, if needed, until the whole amount is paid.” The terms and conditions, as set forth in the prospectus are these: “The company will offer for sale 60,000 shares of stock of the par value of $10.00 — one dollar per share upon the call of the Board and one dollar per share each sixty days thereafter until by a sale of the lots of the company such payments shall be declared unnecessary by the Board of Directors. If more than $¡00,000 should be called for, such excess will belong to the stockholders.

It is not believed that more than five calls can be necessary, and it may well happen that three calls will furnish all the money the company will need to pay on the property and improve the town site, before a sale of the lots, will render any further demand upon the stockholders unnecessary. This was the experience at our sister towns, Salem and Front Royal, and the Lexington Development Company confidently believes that no other locality offers superior advantages as a place for the safe and profitable investment of money.” The sequel shows that this is only another of the many instances o'f misplaced confidence. It appears and is conceded that the defendant, Mr. Taylor, paid five of the installments according to his agreement, that is to say, the first was paid at the time of the signing of the agreement, the second on the 20th December, 1890'- — the time fixed by the Board of Directors, the third sixty days thereafter, on the 20th February, and the fourth and fifth respectively on the 20th of April and June as provided by the agreement. The five unpaid installments matured respectively August, October, December 20th, ’91 and February and April 20th, ’92 — but were not paid.

The reason why they ³⁰⁹ were not paid appears to be that after the payment of the first five installments (50 per cent of the subscription) the Board of Directors issued a printed circular to the stockholders which read as follows: “It is confidently believed that the stock can be paid up by dividends from the earnings of the company, and these dividends will be so declared whenever and as fast as the assets of the company will justify.” It is evident, therefore, that on the 20th August, 1891, when the sixth installment became due, and each sixty days thereafter until and including the 20th April, 1892,” when the tenth and last installment matured, the subscriber, Taylor, was indebted to the company and it had a right to sue for and recover the respective installments. The Statute of Limitations, therefore, commenced to run in his favor when those installments respectively matured, unless as was so earnestly contended on behalf of the plaintiff the defendant did not become liable on his contract until long after the time just indicated. On the sixth of July, 1900, this suit was instituted against the defendant, David B. Taylor, by E. R. Williams, receiver of the Lexington Development Company, to recover the unpaid installments above mentioned. The defendant pleaded the general issue, and two pleas of limitations, one relating to the time of the bringing of the original suit and the other to the time when the amended narr. was filed — the latter being based upon the theory that the amendment made a new case.

A motion that the pleas of limitations be not received was overruled, issue was joined and there was a verdict for the defendant. During the course of the trial the Court granted two prayers of the defendant the first of which declared that the liability to pay the amount of his subscription accrued more than three years before July 6th, 1900, the time of the bringing of this suit. The theory of the second prayer is that the amended narr. filed November 12th, 1903, constituted a new cause of action and that limitations could be pleaded to the declaration as so amended whether it was applicable to the ³¹⁰ original declaration or not. Both of these prayers were granted and the exception taken to this action of the Court presents the only question involved in this appeal, namely whether the plea of limitations is a bar to the original suit instituted July 6th, 1900.

The conclusion we have reached renders it unnecessary to discuss the second plea of limitations which goes to the amended narr. The last installment of subscription having matured on April 20th, 1892, and this suit not having been brought until more than- eight years thereafter, towit, on the 6th July, 1900, the statute will, of course be a bar, unless something has occurred to prevent, such a result. The only remaining inquiry, therefore, is whether anything and if so, what has intervened to prevent the running of the statute. In the first place it is contended that the contract of subscription was not an absolute, but only a conditional contract.

As we have already said it would appear that at the expiration of each period of sixty days the defendant’s obligations matured. It does not appear that anything save the failure of the plaintiff to enforce its rights prevented it from- so doing except, as expressed in the printed circular to the stockholders that it “confidently believed” that the remaining 50 per cent of the stock would be paid up by dividends from the earnings of the company. But as we have seen, this was a delusion. According to the terms of the prospectus the company had the right to continue to collect the unpaid installments “until by a sale of the lots of the company such payments shall be declared unnecessary by the Board of Directors." But no such declaration was ever made.

The contract of subscription contains the provision that one dollar per share shall be paid every sixty days and “if needed,” until the whole amount is paid. This expression, is explained by the prospectus which is made a part of contract, and it is evident that what it means is that if by the sale of lots and the dividends derived therefrom the remaining installments could be paid the subscribers would not be called.on to pay any more. If in point of fact lots had.been sold and money had been realized by the com ³¹¹ pany sufficient to enable the Board of Directors to declare dividends equal to the unpaid subscriptions, it is clear “that under the contract, the prospectus being a part thereof, the company would not be allowed to sue. But no such situation was presented, for there was no sale of lots and consequently no such dividends as were “confidently expected.” It would seem to follow, therefore, that the right either of the company or of its receiver to sue the plaintiff in this case, continued as each installment fell due until the bringing of this suit, which, as we have seen, was a period far beyond the period of limitation.

But it has been argued that the filing of the creditors bill