it to extend its road,1 or to build a branch road where the company has not undertaken to build it, or even where it has.3 2 § 1280. Illustrations Continued: Empowering a Slack Water Company to Extend its Dams and Incur Additional Expense. In an action by a navigation company against a subscriber to its capital stock, to recover certain assessments made thereon by the board of directors, it was pleaded, as a defense, that since his contract of subscription, the legislature had passed an act authorizing the corporation to extend its dams, thereby increasing the amount of its indebtedness beyond what its charter permitted when the defendant became a stockholder. It was held that this was not a good defense to the action. In so holding Gibson, C. J., speaking for the court, reasoned as follows: "An act to incorporate a company for purposes of slack water navigation is as essentially of a public nature as is an act to incorporate a company for the purpose of making a turnpike road. In this instance, then, what has the legislature of Pennsylvania done? It has not pretended to take away any corporate franchise, or to impinge upon any right before granted. That is not pretended. On the contrary, it has enlarged a corporate privilege. But the exercise of it, it is alleged, may plunge the company into an expense not originally contemplated. What of that? The defendant is not bound to contribute to it beyond the amount of his original subscription, and as to that his contract remains the same. But it is said that by taking off the limitation of the company's expenditure, the legislature has altered its power to incur responsibility for greater damages than it otherwise could have done. In that lies the fallacy. The legislature has not made it incumbent on the company to use the additional privilege granted to it, but has left the use of it to its discretion. It may in fact never use it; and whether it shall do so will depend on the volition of the defendant's corporate agents, the president and managers, by whose acts he is necessarily to be bound as his own, even in the acceptance of a modification of the charter for the public good, provided it do not extend to a change of the structure of the association. Such improvements or alterations are frequently made, and subscriptions to the stock are consequently in subordination to the practice. At all events, it is sufficient for the argument that the constitutional re 1 Rice v. Rock Island &c. R. Co., 21 Ill. 93; Cross v. Peach Bottom R. Co., 90 Pa. St. 392; Buffalo &c. R. Co. v. Dudley, 14 N. Y. 336. * * 2 Hawkins v. Mississippi &c. R. Co., 35 Miss. 688. 3 Greenville &c. R. Co. v. Coleman, 5 Rich. (S. C.) 118. Contra, Stevens v. Rutland &c. R. Co., 29 Vt. 545. striction has been restrained by the ultimate tribunal, to interference directly with the terms of the contract, and not merely with its incidents.' "1 § 1281. Changing the Nature of the Enterprise. - An amendment to the charter of a railway company, adopted without the consent of one who has previously become a subscriber to its capital stock, which superadds to the original object of the corporation an authority to establish a line of water communication in connection with the railroad, which will involve large additional expense, which amendment provides for an increase of the capital stock for that purpose, releases such stockholder from his subscription, although the amendment is accepted by the board of directors and also by a majority of the stockholders." The same is true of an amendment to a life and accident insurance company, changing it to a life, accident, fire, marine and inland insurance company.3 § 1282. View that Change Sanctioned by Majority Binds Minority. — The limitation on the rule of the majority agreed on by most American courts has already been pointed out. An early case in Virginia seems to have asserted a broader doctrine. A member of an incorporated insurance company was held to be bound by a statute which varied the terms of the original act of incorporation, such act being passed at the instance of a legal meeting of the company, though he was not present at the meeting. The reasoning of the judges in that case is tantamount to a broad declaration that the charter of a corporation may be surrendered and a new charter accepted by the act of a majority of the corporators, if done at a regular meeting duly notified, and that there is no distinction in this respect between the passage by an incorporated society of an ordinary regulation and a surrender which destroys a fundamental one, Judge Roane 1 Gray v. Monongahela Nav. Co., 2 Watts & S. (Pa.) 156 (1841); s. c. 37 Am. Dec. 500, 503. 2 Hartford &c. R. Co. v. Croswell, 5 Hill (N. Y.), 383 (1843); s. c. 40 Am. Dec. 354. To the same effect see Indiana &c. Turnpike Co. v. Phillips, 2 Penn. 184; McCullough v. Moss, 5 Denio (N. Y.), 580; Troy &c. R. Co. v. Kerr, 17 Barb. (N. Y.) 606. 3 Ashton v. Burbank, 2 Dill. (U. S.) 435. Ante, § 72. it to extend its road,1 or to build a branch road where the company has not undertaken to build it,2 or even where it has.3 § 1280. Illustrations Continued: Empowering a Slack Water Company to Extend its Dams and Incur Additional Expense. In an action by a navigation company against a subscriber to its capital stock, to recover certain assessments made thereon by the board of directors, it was pleaded, as a defense, that since his contract of subscription, the legislature had passed an act authorizing the corporation to extend its dams, thereby increasing the amount of its indebtedness beyond what its charter permitted when the defendant became a stockholder. It was held that this was not a good defense to the action. In so holding Gibson, C. J., speaking for the court, reasoned as follows: "An act to incorporate a company for purposes of slack water navigation is as essentially of a public nature as is an act to incorporate a company for the purpose of making a turnpike road. In this instance, then, what has the legislature of Pennsylvania done? It has not pretended to take away any corporate franchise, or to impinge upon any right before granted. That is not pretended. On the contrary, it has enlarged a corporate privilege. But the exercise of it, it is alleged, may plunge the company into an expense not originally contemplated. What of that? The defendant is not bound to contribute to it beyond the amount of his original subscription, and as to that his contract remains the same. But it is said that by taking off the limitation of the company's expenditure, the legislature has altered its power to incur responsibility for greater damages than it otherwise could have done. In that lies the fallacy. The legislature has not made it incumbent on the company to use the additional privilege granted to it, but has left the use of it to its discretion. It may in fact never use it; and whether it shall do so will depend on the volition of the defendant's corporate agents, the president and managers, by whose acts he is necessarily to be bound as his own, even in the acceptance of a modification of the charter for the public good, provided it do not extend to a change of the structure of the association. * Such improvements or alterations are frequently made, and subscriptions to the stock are consequently in subordination to the practice. At all events, it is sufficient for the argument that the constitutional re * 2 Hawkins v. Mississippi &c. R. Co., 35 Miss. 688. 3 Greenville &c. R. Co. v. Coleman, 5 Rich. (S. C.) 118. Contra, Stevens v. Rutland &c. R. Co., 29 Vt. 545. striction has been restrained by the ultimate tribunal, to interference directly with the terms of the contract, and not merely with its incidents." 1 § 1281. Changing the Nature of the Enterprise. An amendment to the charter of a railway company, adopted without the consent of one who has previously become a subscriber to its capital stock, which superadds to the original object of the corporation an authority to establish a line of water communication in connection with the railroad, which will involve large additional expense, which amendment provides for an increase of the capital stock for that purpose, releases such stockholder from his subscription, although the amendment is accepted by the board of directors and also by a majority of the stockholders." The same is true of an amendment to a life and accident insurance company, changing it to a life, accident, fire, marine and inland insurance company.3 § 1282. View that Change Sanctioned by Majority Binds Minority. The limitation on the rule of the majority agreed on by most American courts has already been pointed out. An early case in Virginia seems to have asserted a broader doctrine. A member of an incorporated insurance company was held to be bound by a statute which varied the terms of the original act of incorporation, such act being passed at the instance of a legal meeting of the company, though he was not present at the meeting. The reasoning of the judges in that case is tantamount to a broad declaration that the charter of a corporation may be surrendered and a new charter accepted by the act of a majority of the corporators, if done at a regular meeting duly notified, and that there is no distinction in this respect between the passage by an incorporated society of an ordinary regulation and a surrender which destroys a fundamental one, Judge Roane 1 Gray v. Monongahela Nav. Co., 2 Watts & S. (Pa.) 156 (1841); s. c. 37 Am. Dec. 500, 503. 2 Hartford &c. R. Co. v. Croswell, 5 Hill (N. Y.), 383 (1843); s. c. 40 Am. Dec. 354. To the same effect see Indiana &c. Turnpike Co. v. Phillips, saying: "The effect as to the question before us is precisely the same." Judge Fleming answered the objection to the power of the majority to bind the minority by the acceptance of the charter by saying: "It would be misspending time to refute this argument, as in all institutions of this kind the acts of a majority are binding on the whole: by the civil law that majority must consist of two-thirds of the members." 1 § 1283. Changing the Name. — Changing the name of the corporation, as already seen,2 is not such a material alteration as releases dissenting 'subscribers.3 Where the name of the corporation was given in the preliminary subscription paper, but when the company was organized the words "Saint Louis " were added to the name, it was held that this was no defense to an action on the subscription.* § 1284. Changing the Termini of a Railroad. We have already seen that there is a conflict among the decisions, growing out of opposing theories as to the governing principle, on the question whether an amendment of a charter changing the terminus, or the termini of a railroad, will release a dissenting subscriber. Several cases not there cited exhibit the same opposing theories, or else opposing views as to the proper application of the same theory, -some reaching the conclusion that a material change in one of the termini of a railroad, authorized by the legislature, will release a dissenting stockholder; and others holding that it will not. Under the theory of the former cases, where the route is not expressly stated in the contract of subscription, the charter of the company, as it exists at the time, is the law of the contract, and any subsequent change of termini from those therein prescribed, discharges the obligation of the 6 5 That it will have this effect, see ante, § 74; that it will not, see ante, § 77. 6 Kenosha &c. R. Co. v. Marsh, 17 Wis. 13; Delaware &c. R. Co. v. Irick, 23 N. J. L. 321. Terre Haute &c. R. Co. v. Earp, 21 Ill. 291. |