
    JANUARY TERM, 1846.
    William A. Hayne and Henry W. Perroneau, Executors of Robert Y. Hayne, deceased, vs. Green E. Beauchamp.
    Where, by the act of incorporation of a ban]:, the subscribers to stock were required to pay, at the time of subscription, ten per cent, in specie, on the amount subscribed for, a mere subscription to stock, without paying the ten per cent, in specie, the subscriber executing his note merely to the bank for that sum, would not constitute the subscriber a stockholder; such subscription would be void, and would impose no obligation on the subscriber. Clayton, J. dissenting; and considering that such subscription would, as between the creditors of the bank and the subscriber, where the bank had gone into operation, render the subscriber a stockholder, and liable to the creditors of the bank for his unpaid stock.
    Where, by the act of incorporation of a bank, it was provided that each subscriber for stock should pay ten per cent, in specie, on the amount subscribed, at the time of ^subscription ; and the commissioners who were to receive the subscriptions and the cash payment, took, in lieu of the latter, the note of the subscriber for the required percentage, which note was discounted by the bank, and the proceeds on the check of the subscriber being drawn and presented to the bank therefor, put to the credit of such subscriber, on his stock account; held, by the court, that the original subscription for stock was void, as being in violation of the charter ; but that the note discounted by the bank, and the proceeds credited to the subscriber on his check, as so much stock paid, would not be void ; the discount of the note, and the direction of the proceeds, with the approbation, and at the instance of the subscriber, would render him a stockholder, at least to the extent of the note, and would constitute a sufficient consideration to render the note binding. By Clayton, J., dissenting: A subscriber to stock in a corporation, by the act of subscription, even though he does not pay the percentage required by the charter, places himself in a situation in which he may be held a stockholder, by persons dealing with the corporation. And if he afterward pay the required percentage, he would become from that time, if not from the original subscription, a stockholder in full.
    In error, from the circuit court of Adams county. Hon. C. C. Cage, judge.
    At the May term, 1841, of the Adams circuit court, William A. Hayne and Henry W. Perroneau, executors of the last will and testament of Robert Y. Hayne, deceased, recovered a judgment at law against the Mississippi Railroad Company, for the sum of thirteen thousand and seventy-six $$ dollars; and being unable to make the money by execution, filed the affidavit required by the statute, and had the process of garnishment served upon various alleged debtors of the company. Among others, a writ was served on Green E. Beauchamp, who answered it, in substance as follows, viz.: He denied all indebtedness to the company; but stated that, in the spring of the year 1838, books were opened in the town of Raymond, in the county of Hinds, in this state, for subscription to the stock of a branch of the company, to be located at Raymond; that he entered his name on the book for one hundred shares, for which he gave no note or obligation at the time, or since, for any part, except for the sum of one thousand dollars, which the company required of him as the ten per cent, on his subscription, exacted under the third section of the supplemental act of incorporation. That the note was signed by' himself, Daniel Thomas and John Stewart, and was^eisthe sum of $1044 44. That this note was unpaid, and was probably still in the hands of the company, at Natchez or Raymond. That he was security upon two other notes held by the company, given under precisely similar circumstances, for stock subscribed for, in the same way.
    That he paid nothing, nor did those for whom he was surety, on his or their stock, except the notes given by them respectively ; which notes, being given in violation of the charter, and in the face of its requirements, that one tenth shall be paid in specie, he contends are absolutely void.
    He contends further, that his subscription for stock imposed no liability upon him; 1. Because the company proposed to traverse the county of Hinds, respondent’s residence, with their railroad; a proposal with which they entirely failed, and were unable to comply. 2. He had derived no benefit, either from his subscription or his note. 3. He had no certificate that he was a stockholder. 4. If not defrauded he had been injured, as well as the whole community, by the misconduct of the company. 5. That he had never been, legally, a stockholder, in the company; the Raymond branch never having had a legal existence. .
    Upon this answer an issue was made to the county, as to the indebtedness of Beauchamp to the company; upon which a trial was had, which resulted in a verdict for Beauchamp. The plaintiffs below moved for a new trial, which being overruled, they filed a bill of exceptions, taken during the trial, and to the refusal to grant a new trial.
    The proof on the trial consisted of the note of Beauchamp, for the sum of $ 1062 dated Raymond, 30th March, 1838, payable ten months after the 30th day of March, 1838, to the order of the Mississippi Railroad Company, negotiable and payable at their banking-house at Natchez; also the following check:
    “ Raymond, June 22, 1838.
    “Cashier of the Mississippi Railroad Company, pay to -- or order, one thousand dollars.
    “ $1000. G. E. Beauchamp.”
    Both note and check were proved to be in the handwriting of Beauchamp. Here the plaintiffs closed their case.
    The defendant introduced the written statement of John B. Peyton, (to whom objection was made as a witness, on the ground that he was a party to a similar note to the one in controversy; the objection was overruled.) He proved that, after the parent bank at Natchez had gone into operation, commissioners were appointed at Raymond to open books for the subscription of stock, to form the capital of a branch to be located there, and that he was one of those commissioners. That the note given in evidence was made by Beauchamp, after he had subscribed for stock at Raymond; but though given after, the subscription for stock and execution of the note were designed by the commissioners to be simultaneous.
    That this note was given by Beauchamp in lieu of the ten per cent, he was required to pay on his stock, by the charter. That Beauchamp never paid any money on that account; nor were the proceeds of the note ever forwarded from Natchez, where it was payable and transmited, to Raymond, or to the commissioners there.
    That it was the understanding between the directory of the parent bank and the commissioners, that the note should be passed by the board as if discounted, and that Beauchamp should draw a check for the net amount of the proceeds; and that that amount should be entered on the books of the parent bank to the credit of the defendant, instead of the payment by «*»e of the ten per centum, in money.
    That the note was delivered to the commissioners, and by them transmitted to the parent bank; that in June, 1838, he received from the cashier of the bank at Natchez a list of those who had subscribed for stock, and whose notes had been forwarded by the commissioners, with a request from the cashier that he would procure the check of each person for the net amount of his respective note, which was given, and included that of Beauchamp, for the thousand dollars. That he did get the check of Beauchamp, blank as to payee, and forward it to the parent bank.
    That about the 1st of October, 1838, a board of directors for the branch at Raymond, was appointed by the parent bank, and convened from time to time. About the same time $>25,000 were sent by the bank to its branch at Raymond; $16,000 of which were in the notes of the mother bank, and $9,000 in the notes of the Mississippi and Alabama Railroad Company. The instructions to the board at Raymond, were to expend the money in advances on cotton, and in purchasing bills of exchange. No advances were made on cotton, and but a small amount invested in bills of exchange. The branch at Raymond discounted one note for the Raymond Railroad Company, and that was the only discount ever made there; the notes of the parent bank were at par, at the time of the transaction with Beauchamp.
    That the branch at Raymond never issued any notes; and all the funds forwarded to it, and their proceeds, were sent back to the parent bank.
    
      There never was paid at the Raymond branch any of the ten per centum required by the provisions of the charter, either in money or anything else, unless the note and check constituted payment; except that W. S. Jones paid part of his subscription in cash, after the subscription; at the time with the others he gave his note and check.
    Gen. John A. Quitman testified that the Board of Directors of the Company at Natchez having determined to make no general discounts, yet discounted some notes for subscribers, to enable them to pay the ten per centum required in cash on subscription for stock. The proceeds of such discounted notes were carried to the credit of the subscribers for whom they were discounted, and permitted only to be drawn out for the stock or the first instalment due by such subscribers. The cashier was directed and required not to pay the checks of any subscriber upon such proceeds in any case, except in payment of such stock. The notes were discounted with the understanding that the proceeds of them should be applied to the payment of the ten per cent, on stock, and to no other purpose, and the cashier was instructed to take care that the credit was not otherwise applied.
    This being all the testimony, the court, at the instance of the defendant, instructed the jury, “That if they believed from the evidence that ten dollars per share was not paid to the company at the time of subscribing at the Branch at Raymond, either in specie or bank notes, but that in lieu thereof the notes of the subscribers were received with the understanding that the company should discount them and receive the checks of the subscribers in lieu of money, it was a plain evasion of the terms of the charter, amounted to no legal subscription for the stock, and the Branch at Raymond did not go legally into operation, or the subscribers become entitled to any stock, and there was a failure of the consideration of the notes, and the defendants were not bound by them.
    “ That if the jury believed that the note sued on was discounted by the company upon the express stipulation that the proceeds should be checked out and applied to the payment of stock in said company and in the branch at Raymond and for no other purpose, the whole contract would be in violation of the charter, and the note sued on, void.
    “ That in pursuance of the terms of the charter the defendant could not have become a stockholder in the Mississippi Railroad Company, or incurred any liability as such, except by subscribing for stock and paying at the time of subscribing ten per centum of the amount of stock so by him, subscribed either in specie or the notes of such bank as the Directors may have consented to receive; unless, therefore, the jury believed, from the evidence, that those requisites had been fully complied with on the part of the defendant, they could not find against him on the score of his being a stockholder.
    “ Where an incorporating act requires subscribers for stock to pay at the time of subscribing, a certain sum on each share, a subscriber who does not pay that sum when he subscribes is not so far a member of the corporation as to be liable in an action against him to recover the amount of his stock; therefore if the jury believe, from the evidence, that the defendant did not at the time of subscribing pay the sum of ten dollars on each share, they are not to consider him liable as a stockholder, and cannot find for the plaintiff.
    “Although the original subscribers may, by accepting the charter of the Mississippi Railroad Company, have become stockholders therein and liable as such, yet the defendant being a subsequent subscriber, if subscriber at all, would not have become a stockholder but by complying strictly with the terms of the charter.
    “ If the note offered in evidence in this cause were given in payment of the ten per centum on the respective shares of stock subscribed, which is required to be paid in at the time of subscribing, or in lieu of specie or bank notes, it is void, and the plaintiff cannot recover on it; if therefore the jury believe, from the testimony, that the note was so given, they must find for the defendant.
    “ If the jury believe, from the testimony, that the note offered in evidence was discounted at and by the parent Bank, color-ably only, and that the nominal amount of the proceeds was placed to the credit of the defendant on the books of the bank, instead of an actual payment of the ten per centum required to be paid on each share of stock taken-at the time of subscribing, then they are not to regard the defendant as liable on the note, and cannot find against him.”
    To these charges the plaintiff excepted and prosecutes this writ of error.
    (The portions of the charter under which the defendant set up his defence are sufficiently quoted in the arguments of counsel, and need not be repeated here.)
    The errors assigned were,
    1. In the instructions given at the instance of the defendant.
    2. In the refusal to grant a new trial.
    
      Eustis, for plaintiff in error.
    It is manifest, from the evidence in this case, that the note in question was not given to the commissioners in payment of the ten per cent, neither the maker nor the commissioners so understood it. The note is payable to the mother bank, and has twelve months to run. It was not understood that the commissioners were to wait twelve months for the ten per cent. When were the commissioners to receive the money? The answer is, just as soon as they chose to send to Natchez and get it. They were certain that the money would be there paid to them, the moment the defendant’s check was produced. There was then no selling on a credit, and the policy of the law was not wounded in that particular, the sluggish action of the commissioners was no detriment, for the money was safe, and always at their command. It was as fair a transaction in this particular, as if the defendant had given to the commissioners his check on a bank close at hand, in which he had the fund to meet it. It will not be pretended that a law which authorizes the taking of bank notes, would be violated by the taking such a check. It is the most common way of transacting such affairs, and we suppose half the stock in the state has been paid for in checks on banks, instead of the manual trans-fev of money. Again it will not be pretended that the amount was not paid to the commissioners. The testimony shows that it was paid, but our opponents say it was paid in the issues of the mother bank. We deny that there is one particle of proof of this. There is no evidence in the record that the mother bank had before that time issued a single note,'and various statutes authorizing payment in the notes of specie-paying banks for stock in the mother bank, raise the presumption that the funds accumulated by her, were the notes of other banks or specie, and long afterwards amongst the paper sent by her to be issued by the branch at Raymond was $9000 of the money of the Alabama Railroad Company. There is then no evidence that she paid the ten per cent, to the commissioners in her own issues, and the policy of the law was not wounded in this particular. This is not a suit to recover an amount subscribed for stock, that amount has been paid. For aught that appears in this record the commissioners may have handled every dollar of it in specie, they could so have done, by going to the mother bank and demanding it.
    Again, the court will observe, that although it has generally been public policy that banks should be created upon a specie basis, that has been departed from by the legislature in this case. They authorized the payment in- the notes of such banks as the directors should consent to receive. These broad terms would include her own notes, and if there is any detriment, the Legislature are responsible for not having thrown sufficient protection around the rights of the people, but an act under the law cannot be a violation of it, nor will those decisions in which the courts are asserting the dignity of the State, be found applicable to such a state of facts. Act of 1838, p. 143.
    We will now examine the cases which will be urged as decisive of the case at bar on the ground of illegality.
    8 Serg. & Rawle, 219, was a case in which the party was required to pay five dollars per share before subscribing, to create a fund for the expenses of the commissioner; no note was given, but a suit long after the subscription was brought to recover this five dollars per share. The court decided that it was a condition precedent, and intended by the legislature as a check upon those zealous persons who, if they could do it without cost, would desire to become subscribers and control the managers of the road ;■ that giving the credit was in frau-dem legis. In this casé the court were not unanimous, Judge Yeates dissenting, and his opinion is better than any argument, we could offer upon the propriety of finding it necessary to public policy, to discharge the party from his contract.
    The opinion of the court in this case is only to be taken as a precedent, that a promise is void when it is in frandem legis. If read as a precedent to show that the acts done by the party, (if he had paid the five dollars as required by the act) were insufficient to constitute him a stockholder, we can show as we shall presently, abundant decisions to the contrary.
    14 Serg. & Rawle, 434, is another case upon similar subject-matter, but it does not appear that the payment of the money was a condition precedent. It was small in amount, no arguments of counsel appeared, and yet although the incident of condition precedent on which the other case turned is wanting, the court state briefly that the other case governs it, and so decide.
    
      The Union Turnpike Company v. Jenkins, 1 Caines Cases in Error, 86, was a case in which the words of the act are as in the case at bar: “Shall at the time of subscribing pay to the commissioner 10 dollars per share.” The action was brought upon the promise to the commissioners made before the corporation was in being, but calling them in the subscription paper by the corporate name. It was decided that the promise could not be recovered upon. But the case is reviewed in The Goshen Turnpike Company v. Hurtin, 9 Johns. 217, and in The Duchess Manufacturing Company v. Davis, 14 J. R. 238, and the ground of the decision stated to be, that the corporation to whom the promise was made was not in esse.
    
    These three cases are all that we have been enabled to find, in which the legality of the promise was in the record. The first turned upon a condition precedent put there expressly for the protection of the state. The second was not, as the opinion shows, justified by the facts, and the third is by the supreme court of New York not regarded as law except on the ground that the payee of the promise was not in esse at the time the promise was made.
    Unless, then, the counsel for defendants can show other cases, we are without a decision establishing the point, that if the note had been given in this case to the commissioners in payment of the ten per cent, it would be void. By our act, (page 143 of acts of 1838,) the money was to be paid at the time of subscribing, not before. As to the payee in the note in our case being a competent payee, there is no question.
    Having thus attempted to divest the transaction of illegality, by showing that the facts are not in the case, which would have made it illegal according to the decisions we have cited, we proceed to another ground of defence, that there was no consideration for the note.
    The defendant will contend that he is not liable because he got no stock, and because the Branch did not come up to his anticipations.
    To this we reply, that if the note was made to be discounted in bank, if it was so discounted, and the proceeds applied as he directed, it is enough for our purpose. Scott v. Mississippi Railroad Company, 7 How. 79; 1 Cain. R. 45. The consideration given for the note was the amount passed to his credit in the Bank. But we are willing to show him that he was a stockholder, for which purpose we refer to 9 John. 217; 14 Wend. 20; 5 Mass. 80; 1 Binney 70; 16 Mass. 94; 11 John. 98. Whether the branch at Raymond went properly into operation or not, is too important a question to be decided collaterally in this case. Spear v. Crawford, 14 Wend. 30; Trustees of Vernon Society v. Hills, 6 Cow. 23 ; Slee v. Bloom, 5 J. C. R. 379; 9 J. R. 159.
    It appears by the record that when the defendant’s check was sent, the paper of the mother bank was at par. This is the only mention of her having any issues. Another point which it may be as well to make, is, that the illegal use of the money by the defendant, would not vitiate the note, though known to the payee. Toler v. Armstrong, 11 Wheat. 276.
    
      Chief Justice Marshal uses this language: “ So Tolers’s knowledge of the illegal transactions of Armstrong, and that his money was advanced to procure the delivery of goods which had been illegally imported, could not vitiate a contract to repay that money.” With these views of the case we submit that the verdict was not justified by the evidence, and the opinion of the court below, although possibly sustainable as abstract propositions, are not applicable to the facts of this case.
    Montgomery, on the same side.
    The only question involved in this cause, is whether the defendant is liable to pay the amount of his promissory note given for the first payment of the price of stock of the Mississippi Railroad Company, subscribed for by him.
    On' examination of the charter of the company, it will be seen that in 1836 it was incorporated as a railroad company, merely. Provision was made in that act for the subscription to, and payment for, stock preparatory to its existence as a corporation. In 1837 a supplemental and amended charter was granted, which recognizes the company as a pre-existing corporation, and confers on it additional privileges, that of banking, establishing branches, &c. Laws of Miss, from 1824 to 1838, p. 702.
    The ninth section of this act authorizes the directors of the company to cause books of subscription to be opened at different places, for the sale of stock, and prescribes the terms on which any person should become a stockholder.
    Before the subscription of the defendant, another amendment was made to the charter in 1838. Ib. 830.
    This last act alters the terms of purchasing stock. See § 3. This requires that the subscriber, at the time of subscribing, shall pay ten per cent, of the amount of stock, “ in the notes of such banks as the directors shall consent to receive.”
    By the 14th sec. of the first amendment, the original charter and that amendment are declared to be public acts. Ib. p.706.
    These are all the statutes which it is necessary to notice. And it will be seen, at a glance, there is a marked distinction between this case and the cases cited from 8 and 14 Serg. & Rawle, 21 Wend., 8 Conn., 10 Yerg. &c. In all those cases the corporation had not gone into existence, and the act of the legislature barely amounted to a proposition on the part of the state to contract with such persons as chose to become stockholders, to allow them certain rights on certain specified conditions, and the state appointed her agents to accept the proposition or acceptances of her proposition. The terms of the contract, and powers of the agent were defined, and no engagement made by the agent essentially different from, that authorized by his power, would bind his principal, the state, and could not bind the corporation, because it had no existence, and could not be presumed to have authorized or approved his act. The case in 10 Yerger was the case of a mere depositary pointed out by the law. He had no authority of any kind. His duty consisted in receiving and keeping the money. He was not the agent of either party, and therefore could not consent to anything. The other cases were cases of mere agents of the state, whose powers were defined and limited by the charter. They therefore could not bind the state or the corporation by any act not strictly within the scope of their powers.
    But in this case the corporation was in existence, with full banking powers, and authorized to make every species of agreement. As a corporation was authorized to open books for the sale of stock,' the provision of the charter which prescribed the terms on which individuals should become stockholders, was not a condition precedent to her existence; but a privilege extended to individuals who might feel disposed to purchase the stock, to wit, that any person, whether agreeable to the company or not, should have the right to become a stockholder, on paying ten per cent, of the amount of stock he desired to subscribe for. And that the company could have been compelled to admit any person who at the proper time complied with this provision, is too plain a proposition to admit of doubt. And what more could the legislature have had in view? Why require books to be opened for the sale of the stock, except to enable individuals desirous of engaging in such enterprise to come into public- competition on equal terms'? This may seem silly now, when bank stock has become worthless, but when this charter and the last amendment was passed, such was not the case. Bank stock generally was at par. The stock of this bank was at par in 1839, when the act passed making the state a stockholder in lieu of the interest she held in the Planters Bank. And the stock of either bank, in ' market commanded its par value in that which was then current as money. And Gen. Quitman was in the summer of 1839, offered $95 per share for the whole of the Planters Bank stock, in specie. Hence it is but reasonable to presume the legislature was anxious to secure to individuals an opportunity to participate in the advantages which they proposed to confer on thp stockholders of the corporation. This is part of the public history of the times, and should be taken into consideration when giving construction to acts of the legislature.
    No doubt appears to exist as to the power of the company to lend the amount of the note, and if the bills of any banks of the state had been paid out to Mr. Beauchamp, no matter what use he may have made of them, even if he had taken them to Raymond and handed them to the agents of the bank having charge of the books of subscription, in payment for his stock; no question could be raised as to his liability to pay. Now if by such nice technical distinctions, a fair, honest contract can be defeated, will it not be simply on the ground that the form was defective, and not the substance 1
    
    It cannot be objected in this case that the company was not bound, for it is shown the agent pursued his authority. He was their agent, and had power to bind them. And upon complying with the contract by paying the balance of the subscription, Beauchamp could have compelled a grant of a certificate of stock.
    Therefore we conclude the note was given for a valuable consideration, that there was competent'parties to the contract, and the defendant is legally and equitably liable.
    
      Sloan,. for defendant■ in¡ errori •
    I contend'that the-defendant was-propertydischarged-by the-verdict, and judgment’rendered in1 the court-bélow'.
    The note offered in evidence was a nudum 'pactum: there was no- consideration' whatever1 to' support it¡- Assume the ground that the note was really discounted; for' the defendant, then it is conclusively shown, by the record, that the'proCeeds were never paid over to him; nor* was he allowed any control whatever'over them, either by a certificate of deposit; a manual1 delivery, or- otherwise. But it' appears' by the record, beyond doubt, that the note never was in fact discounted by the'Mississippi Railroad Company. If, therefore, the defendant ever-received any- consideration, it consisted of the ihterest'which he, as a stockholder, has -in the capital stock1 of said company; and, if a-debtor of said company, at all, he is a stock-debtor.
    I. Is he then-a stockholder? The supplementalact of incorporation, which confers on the company' banking powers, after providing in section 9 for the establishment' df branches; and fixing the terms upon which persons can'becomd stockholders* provides that the branch at Raymond and Gallatin shall not go into operation until one half the capital stock shall have been subscribed, and the $20 per share, provided by this act,- paid in the branch where- the same is located, &c. The 3d section of the amendatory act, reduces the amount' tobe paid, at' the time of subscribing, from-$20 to'$10 per share',-and provides that payment may be made in the notes of such' banks as the directors shall consent to receive: It-provides, also, in' section 4, that “none of the said branches shall go into operation until one half of their capital stock shall have been subscribed for, and ten dollars'per share be paid into, and'at the respective branches, at the time of1 subscribing.” The-33d section of the original act prescribes the terms upon which “ scrip” or other evidence of ownership of stock shall be obtained, in these-words : The president and directors shall issue scrip to all owners of stock, who shall have fully complied with the provisions of this act.
    
      Now, no rule of law is better settled than that every contract, where the consideration is promise for promise, must be obligatory on both parties, or both parties will be at liberty to recede. Cook v. Oxly, 3 Term R. 653.
    To an incorporated company a man cannot be bound, as a subscriber, until the company is bound to him: his liability as a stockholder can arise only by virtue of the interest which he acquires in the shares. I do not say that he must have received certificates of stock or scrip, but he must have acquired the right to demand, sue for and recover such evidences of interest. Until he has done so I see nothing, either in morals or law, to bind him. A man may have intended to become a stockholder, he may have declared his intention, yet, will it be pretended that, having gone no farther, he is not at liberty to decline?
    By the act of incorporation, the payment of $10 per share was made as necessary to constitute a stockholder as the act of subscribing. If that requisite could be dispensed with, the act of subscribing could be also, and an intention to become a stockholder, verbally expressed, would be equally obligatory on both parties. Such a step, indeed, might make one liable as a partner for the debts of the partnership, to a third person, who is a creditor, because he might thereby have given credit to the firm.' But here there can be no such liability. The personal responsibility of the stockholders is held to be inconsistent with the nature of a body corporate. Angelí & Ames on Corporations, 349; Man v. Chandler, 9 Mass. R. 335; 5 Ibid. 420; 2 Serg. & Rawle, 371.
    I ask, then, did the branch at Raymond ever go into operation ; or did the defendant pay into, and at the branch at Raymond, or elsewhere, the $10 per share, as required, either in cash or bank notes of any kind ? Now what has the company, that it had not, before the pretended subscription of Beauchamp, except his promissory note and check ? Has it a dollar more or a dollar less, of money? If not, Beauchamp is clearly not a stockholder.
    
      He could never have prevailed, by suit in chancery, to recover certificates of stock, or scrip. Nor, if the scheme had been prosperous, could he have demanded a portion of the dividends upon his pretended shares, or of the surplus remaining, upon payment of general creditors. I cite the following authorities, however, as decisive of this point: Hibernia Turnpike Company v. Henderson, 8 Serg. & Rawle, 233; Leighty v. Susquehanna Turnpike Company, 14 Ibid. 434; XJnion Turnpike. Company v. Jenkins, 1 Gaines’s R. 392; S. C. I Caines’s Cases in Error, 86, — and as fully sustaining the instructions given to the jury by the court below. The facts of those cases were substantially the same as those in the case at bar. The only apparent difference is in the case of Hibernia Turnpike Company. But whether the charter requires the payment of a certain per centum, prior to the time of subscribing, or at the time of subscribing, can make no possible difference in principle, for the payment, in either case, becomes necessary to constitute a stockholder; in either case it is a condition precedent to.his right to apply for scrip.
    Reference is made, by counsel for the plaintiff, to the Goshen Turnpike Company v. Hurtin, 9 Johns. R. 217; Highland Turnpike Company v. McKean, 11; Dutchess Manufactory v. Davis, 14 Johns. R. 238; and Spear v. Crawford, 14 Wend. 20, as'virtually overruling the decision in the Union Turnpike v. Jenkins. Upon examination of these cases, it will be found that the only question in view was, whether the remedy given to the company by the statute to exact as a penalty, forfeiture of the shares and all previous payments, was not the only remedy : the court held that it was not. Spear v. Crawford is not an analogous case: the company there was but a limited partnership; the members being made individually liable, in the amount subscribed, by the act of incorporation. On the point above taken, see the case of Crooker v. Crane, 21 Wend. 211, where the case of Jenkins and other New York cases are reviewed, and the position here taken fully sustained.
    2. It will not be denied, that the Mississippi Railroad Company; as a corporate body, may exist as a unit, without the establishment of the branches ; nor will it be assumed that the branches could have gone into operation as independent corporate bodies. In denying that the branch at Raymond ever went into operation, I neither deny the corporate existence of the Mississippi Railroad, nor its right to exercise and enjoy every franchise granted by the charter. I go farther. I acknowledge the right of the company tó withdraw any funds that may have been deposited with the commissioners, for special purposes, and to refuse to recognize the existence of any nominal branch, without annihilating itself, and without waiting for the state to proceed against such branch by information, or scire facias, as if such a cause were practicable.
    3. I contend, farther, that Beauchamp here sets up a conscious defence, and is entitled to as favorable consideration as any one who is sued upon a note for which he has received no consideration. Suppose he had allowed judgment by default nisi, and upon service of scire facias judgment final to go against him ; what recourse would he have had, either against the company, or the individual members who compose it'? The judgment against him would have been no evidence of ownership in the stock of the company, either as against it or the members, and he could not have enforced contribution.
    4. Again, I insist the court below did not err in refusing to grant a new trial.
    Suppose that some of the instructions given were improperly given^ yet, if the verdict was warranted by the evidence arid the law, there is no ground for a new trial. In other words, this court will not disturb the verdict and judgment, when warranted by instructions properly given, upon the facts of the case, although an instruction may have been improperly given.
    I wish to call the attention of the court to the fact, that there were two classes of subscribers, as provided jn the original act. One was to pay money, the other to furnish the security of a mortgage. The bills receivable of a subscriber, then, could never be received by the company, and treated as a fund, unless secured by mortgage. The defendant, be it observed, did not intend to become a mortgage subscriber.
    
      As to the assertion that Peyton’s testimony is contradictory, I would briefly reply, it corresponds substantially with that of General Quitman. He first asserts there was no discount of the note. He afterwards goes into all the circumstances explanatory of the fact, and they are found fully to sustain.the fact stated, that the note was not in fact discounted.
    
      George S. Yerger, on the same side.
    The evidence shows defendant subscribed for the stock, but paid no money. He gave- his note, which was subsequently discounted by the mother bank. He also gave a check for the amount of subscription, having no funds, or money, at the time, on deposit, and this known, of course, to all parties.
    We think the contract, in this case, was in violation of the 9th section of the supplementary charter, and the 3d section of the amendment thereto.
    The contract of subscription is always governed by the law prescribing the manner. Neither the corporation or the commissioners can waive or dispense with the terms and conditions, because it is intended to protect the public.
    When subscriptions are required to be paid in gold or silver, at the time of the subscription, both the subscription and the payment are required to constitute the party a stockholder. So, where part is required to be paid at the time, it must be literally complied, with, to constitute the party a stockholder. 14 Serg. & Rawle, 434 ; 8 Ibid. 219; 21 Wend. 220, and authorities cited.
    The commissioners who are authorized to receive subscriptions, act ministerially. It is a bare authority given to them, and the law is their letter of attorney. Hence, where money is required to be paid at the time of subscription, they cannot take a note, or check, to be paid at a future day,.for this is a direct violation of the law, requiring the money to be paid at the time of subscription. Ijyth v. Eiherly, 10 Yerg. R.; 21 Wend. 219.
    In ordinary cases, where a bank, or an individual, is authorized to make a contract, generally, and no prescribed mode or manner is pointed out, it may make it as it chooses, and in such cases, if it make a conditional contract, the condition may be waived or dispensed with. But in cases where the legislature authorize contracts to be made, upon certain terms or stipulations, there is, -and can be, no contract, except the terms and stipulations prescribed are performed.
    The charter here says, part of the money shall be paid at the time of subscribing; the commissioners, or directors, say no, we will not require it to be paid at the time of subscribing. We will take your check, and consider that money, or take your note, and consider that money.
    It is evident the giving the note and check, which note was to be afterwards discounted, and money subsequently paid on the check, were events that might or might not take place. The law authorizes no such contingencies. The law commands the act to be done in one way, the commissioners do it another; the policy of the law is thus evaded.
    Again, it is evident this mode of payment was resorted to, to evade the provisions of the law; and, in such case, the contract is of no more validity than a direct and positive violation. Union Bank v. M’Donnough, 5 Louis. R. 63; 21 Wend. 220.
    The contract of subscription was invalid and illegal, because contrary to the positive provisions of the statute. See above authorities, and 21 Wend. 219, 220; 8 Connecticut, 483.
    I do not contest the existence of the corporation, but, I say, being one, it cannot recover, unless defendant is a stockholder.
    In this case I do not contend there is no corporation. Admitting the corporation to exist, the question is, can it, the bank, enforce the contract of subscription; if it cannot, of course its creditor cannot, by garnishment.
    The note was given for stock, in lieu of money; it is, therefore, void, and against the policy of the act, as the within authorities prove.
    
      Eustis, in reply.
    It was said, in argument, that the validity of this note could be tested by the inquiry, “ did the acts of defendant and the commissioners increase the stock-fund?” To this we reply, that the act of 1838, being an amendment to the amendment of 1837, which latter authorized the establishment of branches, does on its face authorize the commissioners to receive in payment for the ten per cent, the paper of any bank which the directors choose to receive. The legislature knew that nothing but specie or the bills of specie-paying banks can possibly create a stock fund, or any other kind of fund. In the act of 1837, they required payment in one of these two modes, and under that law it might be said that the public policy was to create a stock-fund; but in 1838 they expressly repealed or modified that provision, and under this last act, it cannot be said that it was any part of the policy of the law to create a stock-fund. There was but one requisite remaining; that the notes received should be the notes of a bank. Notes of a bank (or specie) were received by the commissioners in the case at bar, and whether the stock-fund of the company was thereby increased is immaterial, because the legislature neither provided nor could reasonably have expected, .under this law, that the subscription to the branches would increase the stock-fund.
   Mr. Chief Justice Shakeey

delivered the opinion of the court.

The plaintiffs in error sued out garnishee process against the defendant and others as debtors to the Mississippi Railroad Company, on a judgment which they had previously obtained against the Company. Beauchamp alone answered, denying any indebtedness whatever, but proceeded to state the facts on which his denial was predicated. It seems that this Company, as an incorporated bank, in the spring of 1838, opened books of subscription to the capital stock, at Raymond, to constitute the capital of a branch to be located at that place. On these books the respondent entered his name as a subscriber for one hundred shares, being ten thousand dollars, but gave no note or obligation for the payment of the money, nor did he pay any money, although the charter required that ten per cent, on the amount subscribed, should be paid at the time of subscribing. But the Company, pretending a compliance with that provision in the charter, required a note, which should net $1000 after deducting the discount, as a payment of the ten per cent, which note the respondent gave, and which is still unpaid. Sundry other persons executed similar notes for the same purpose, but no money was paid by any of them. The respondent insists that as the charter required a payment of ten per cent, on the amount subscribed, these notes were void. The answer proceeds to state that the company violated its engagement to construct the railroad, and also denies that the branch was established at Raymond, and avers that in consequence of these failures, the subscribers and the public were much imposed upon, and deceived. The defendant therefore concludes by denying that he ever was a stockholder.

An issue was made upon this answer, on which the jury found a verdict for the defendant. A bill of exceptions was taken during the trial to the ruling of the court, and another to the overruling a motion for a new trial. It is now assigned as error, that the court erre.d in charging the jury, and also in denying the motion for aln'ew trial.

The propriety of the charges given must depend upon the evidence. The plaintiff offered the note for $1062x8/w, which had been given by the defendant to the bank, dated 30th March, 1838, payable to the Company at their banking house in Natchez at ten months; and also a check drawn by defendant on the bank, for $1000, dated June 22, 1838, and proved that both were executed by the defendant. The defendant then introduced John B. Peyton, and proved by him that after the parent bank had gone into operation at Natchez, commissioners were appointed to open books of subscription at Raymond for the stock to form -the capital of a branch at that place, he being one of the number. The note offered in evidence was made by the defendant after he had subscribed in said books, and although the note was not made at the time of subscribing, yet the two acts were considered by the commissioners as simultaneous; that this note was given in lieu of the ten per cent, which the charter required to be paid at the time of subscribing, the defendant having paid no money, nor were the proceeds of the note, after it was discounted, sent to the branch at Raymond. It was the understanding between the directors of the principal bank and the commissioners, that this and other notes of the like kind, should be passed by the board as if discounted, and that checks should be drawn by the makers for the amount, after deducting the discount,, which amount should be placed to the credit of the defendant and others, in the books of the bank, instead of the ten per cent, which should have been paid at the time of subscribing; and accordingly the note was delivered to the commissioners to be forwarded, and some time afterwards the commissioners received from the cashier of the bank at Natchez a list of individuals who had received credits for their notes, subject to their checks in payment of their stock subscriptions. This list contains the name of the defendant, against which is placed a credit of $1000. By this communication, the commissioners were requested to receive and forward the checks of the several individuals for the respective amounts to their credit, and accordingly the defendant’s check was taken and forwarded, the place for the payees name being left blank. About the first of October, 1838, directors were appointed by the parent bank for the branch at Raymond, who convened at sundry times; and about the same time the sum of $25,000 was sent up, with directions to appropriate it in advances on cotton, and in buying bills, which amount consisted in notes of the principal bank, and in notes of other banks. No advances were made on cotton, and but a small amount invested in bills, but the directors made a loan to the Raymond Railroad Company. The notes of the principal bank were then at par, but the branch at Raymond never issued notes; and the funds which had been sent up, or the proceeds, were returned to the principal bank.

Gen. Quitman stated that the board of directors of the principal bank had determined to make no general discounts, but still discounted some notes for subscribers, to enable them to pay the ten per cent, required on their subscriptions. The proceeds of such notes were carried to their credit, and permitted to be drawn out only in payment for stock, and the cashier was directed not to pay the checks of subscribers, except to be applied in payment for their stock. The notes were discounted with an understanding that the proceeds should be so applied, and for no other purpose.

Before we proceed to notice particularly the charges of the court, let us first see whether the foregoing facts are sufficient to impose an obligation on the defendant.

The first question which naturally presents itself, is, was he a stockholder by virtue of his subscription. It is to be observed that by the amendments to the original charter, books for subscription to the capital stock were to be opened at different places, under certain regulations. By the ninth section of the supplemental act of 1837, each subscriber was required to pay at the time of subscribing, twenty dollars on each share taken, in specie, or in the notes of specie-paying banks. By the amendatory act of February 1838, the amount required to be paid at the time of subscribing, was reduced to ten per cent, on the amount of the subscription, and a privilege given to pay it in the notes of such banks as the directors might consent to receive. But there was no change as to the time of payment. Here, then, is a positive requirement of law, that each individual, subscribing for stock, should pay a certain per cent, at the time of subscribing. Could any one become a stockholder without complying with this provision? It would seem not. It amounts in effect, to a declaration prohibiting any one from becoming a subscriber without paying the required amount. Two things were necessary to constitute a stockholder ; first, a subscription, or some act equivalent, and second, the payment of the required sum, the latter being the most important act, because it constituted the groundwork, on which the mutual rights of the parties depended. It was a condition precedent to the right to become a stockholder, and without its performance, the subscriber acquired no rights, nor were any obligations imposed on the directors or commissioners. The contract lacked mutuality. The defendant had no means of coercing a stock certificate, or other evidence of ownership, from the directors. They had received no consideration, and were consequently under no obligation. As the defendant could only become a stockholder, by complying with the provisions of the law, proof of the performance of the required condition, would have been an indispensable requisite to his right to call for a certificate of stock. We have here a plain, unambiguous declaration of law. We are not at liberty to say that it was useless, or that its object could be accomplished in a different way, and at a different time. Subscribing for stock, without paying the ten per cent, was a direct violation of the law, and being so, it was void. But it is insisted that a distinction is to be taken between those cases in which the subscription is made to an existing corporation, and a mere subscription in view of a subsequent charter. True, there is a distinction. In the latter case the subscription, or the undertaking is not always obligatory; in the first it is, and an action may be sustained on such a subscription, unless it has been made in violation of law, or, which is the same thing, unless the subscriber has failed to comply with the conditions required by law. The decisions referred to, are based upon two distinct classes of cases; first, where the charter requires that a certain sum should be paid at the time of subscribing; and second, where such requirement has been made by the directors, to whose discretion the matter was left by the charter. In such cases, the directors, having required the payment, may dispense it, either directly or by implication, and the obligation on the subscriber, is still binding. But the directors have no discretion, where the payment is required by the charter. They can neither dispense with it, nor evade it, by adopting a substitute. To the first class belong the cases of The President and Managers of the Hibernia Turnpike Road v. Henderson, 8 Serg. & Rawle, 219; Union Turnpike Company v. Jenkins, 1 Caines’s Cases in Error, 86; The Highland Turnpike Company v. McKean, 11 Johns. R. 98; Lighty v. Susquehanna and Waterford Turnpike Company, 14 Serg. & Rawle, 434; Crocker & Williams v. Crane, 21 Wend. To the second class belong the cases of Delaware and Schuykill Canal Company v. Sansom, 1 Binney, 70; Worcester Turnpike Cor poration v. Willard, 5 Mass. R. 80; Chester Glass Company v. Dewey, 16 Mass. R. 94; Goshen and Minsink Turnpike Road Company v. Hurton 9 Johns. R. 217; Duchess Cotton Manufactory v. Davis, 14 Johns. R. 238; and Spear v. Crawford, 14 Wend. 20. We conclude, then, both on reason and authority, that the subscription was a void act, vesting no rights in the subscriber, and imposing no obligation on the corporation. There was no mutuality of contract. The corporation, could not, under such circumstances, have maintained an action, and of course its creditor, who acquires only such rights as it possessed, cannot be in a bgiter condition. It was in violation of law, to permit a subscription without the payment of the required sum, and no obligation can be contracted which must rest on a breach of the law.

But it does not necessarily follow, that the note was void. That may present a very different question. It may be true that the act of subscribing was void, and still the note may be valid. Although the note may have been made for an improper purpose, yet, if the defendant, by himself or his agents, had the note discounted by the principal bank, and received the proceeds, or consented to their appropriation in a particular way, he must be bound to pay it. If by his consent and approbation, the proceeds were applied in payment for stock, he is still a stockholder, to that amount at least, not in virtue of his original subscription, but by the subsequent purchase. The charter does not designate the mode to be observed in subscribing for stock. Any act, then, which amounts to a valid contract for stock, will constitute a stockholder. If the defendant sent the note to Natchez to be discounted, and afterwards sent a check for the amount, knowing that it would be applied in payment of stock, and consenting to such application, has he not, if the note was so used, received a consideration which will-make the note binding 1 This would seem to be the result. The proof is, that the note was given with an understanding that it would be discounted. Itwas discounted, and the defendant being so .informed, sent a check for the proceeds, knowing how they were to be appropriated. In all this transaction, the officers of the hank, to whom the note and check were sent, acted but as the agents of the defendant, and as he ktiew what was to he done, and consented to the act, and the manner of doing it, he is bound. By his acts he conferred full power on the officers of the bank, to use his money in payment of stock. If they have done so, he is a stockholder to the extent of the amount so paid, and perhaps to a greater amount, if the contract of his agents be of a character to make him a stockholder to a greater amount. In this transaction we find the mutuality which is necessary to make the contract binding. If, by the consent of the bank, so much of the defendant’s money has been invested by the officers of the bank, as agents, in the purchase of stock, the corporation cannot say that the defendant is not a stockholder. The actual payment of the money, evidenced by appropriate entries in the books of the corporation-, would entitle him to receive a stock certificate, or other proper voucher of ownership. Not only did the defendant do every act necessary on his part to consummate the purchase of stock; if we may assume that his money was so applied, but he has acquiesced in the acts of others, performed ■ for him, for a period of time sufficiently long to invest them with a binding character. At least we have no evidence of a disclaimer, evert if he had a right to disclaim them.

Let'us in the next place see how fár the charges of the Court conform to the principles we have laid do win So far as the court held the payment of teri per cent, on the amount subscribed necessary to the validity of the subscription, we agree to the propriety of the charges in their application to the subscription alone. But the court also charged the jury that “If the note was discounted by the company upon the express stipulation that the proceeds should be checked out artd applied to the payment of stock in said company and in said branch at Raymond, and for no other purpose, then the whole contract was in violation of the charter of the bank, and the note sued on is void.” This proposition is in direct conflict with our view of the law. The principal bank had been in operation more than a year, and may have had money to loan. If so, no reason is perceived why a loan made with an understanding that stock should be taken with the money, should be regarded as void. We have said that stock cannot be paid for in the notes of the bank in which the stock is taken. We think it evident that no bank can possess such a self-increasing power ; but it does not follow that it cannot loan money which shall again be returned to it, as a contribution to the capital stock. But it is to be observed, that such a transaction to be valid, must be bona fide, and not in fraud of the charter. If this was of that description, the note is valid, and the defendant became liable to the bank on it, not as a note given for stock, but for money which he had borrowed. There was error then, in this charge of the court for which the judgment must be reversed, and the cause remanded.

Mr. Justice ThacheR concurred in the foregoing opinion.

Mr. Justice Clayton

delivered the following dissenting opinion :

I concur in the opinion that the judgment of the court below must he reversed, and the cause remanded. But I do not concur in the principles which are laid down for the government of the case, when it goes back to the circuit court. I cannot consent to the conclusion “ that the subscription was a void act, vesting no rights in the subscriber, and imposing no obligation upon him, or upon the corporation.”

In the first place, it is to be observed, that this is not like a proceeding by the state against a corporation, to seize its corporate franchises; in such event, the failure to comply with the conditions, may be given in evidence. Nor is it a proceeding by the corporation itself against a reputed stockholder, to compel payment of his stock; in such case, if the rights of creditors or of third persons are in no way involved, the defence might be made. But this is a proceeding by a creditor of the corporation to reach a stockholder, where a valid corporation is in existence, and where the stockholder was permitted to plead his own illegal acts — his own failure to comply with the terms of the charter, to avoid his own act of subscription. The bank has not refused to recognize him as a stockholder, on the contrary, it is bound by its own acts to admit him to be such and the naked question therefore is, can the defendant avail himself of his own wrong, his own failure to comply, as the ground of his exemption. Before the bank went into operation, and incurred liabilities, he might have withdrawn ; to permit him to do so afterwards, would, in my apprehension, violate some of the elementary principles of law and justice.

It is said that an act or contract in violation of a statute cannot be made the foundation of a suit. This may be true where both parties have participated in the illegal act. But here the violation of law has been altogether on one side. The creditors of the corporation have done no illegal act in receiving the issues of the bank; and if the bank or its stockholders, any or all, may avoid their responsibility by showing a failure on their part to comply with the terms of their charter, is there not a premium held out to fraud in banking transactions ? If they comply with their charters, they are bound to pay their issues, at least to the extent of the stock subscribed; but if they do not comply they are not bound, and all they can make out of a credulous and confiding community is- clear gain. In my view, this is not .the law; on the contrary, I think the cases sustain an opposite conclusion.

In Minor v. Mechanics Bank of Alexandria, 1 Peters, 65, the plea stated, “ that by fraud and collusion a portion of the stock had been fraudulently taken by fictitious subscription.” On this plea, the court says : “If, however, this interpretation of the charter could be supported, and the subscription of the whole capital stock were a condition precedent, the result would not be varied. If the subscriptions were fraudulently made, with a view to evade the provisions of the charter, the law will hold the parties bound by their subscriptions, and compellable to comply, with all the terms and responsibilities imposed upon them in the same manner as if they were bona fide subscribers. It will not make the subscription itself a nullity, hut it will deprive the subscribers of the power of availing themselves of the same.” In Spear v. Crawford, 14 Wend. 24, the court says, “ neither party,.therefore, can escape from the obligations created by the subscription without the consent of the other. .Admitting an act to be unlawful, it does not render the subscription of the stockholders void. It does not work a forfeiture, and the defendant cannot avail himself of any merely unlawful act of the corporation, either designed or fully consummated.” See also 16 Serg. & Rawle, 144; Ang. & Ames on Corp. 2d ed. 89.

The attempted restriction of the principle, by saying that it is not proposed to inquire into the existence of the corporation, is of no practical value. If this subscriber may be released in this mode, there is nothing to prevent a similar release of every other subscriber, and the corporation is thus virtually annihilated at the very time when the court says it will not’ inquire into its existence. After this determination it may have a nominal being — stat nominis umbra — it may remain as the shadow of a name, but it is nothing more. If a bank bring suit, even if its corporate existence be denied, or fraud in its inception be pleaded, the production of its charter and evidence of user, establish the right to recover. But if it be sued and judgment obtained against it, if you attempt to make the stockholders pay up their stock you cannot succeed in doing so, if they can prove that they have not complied with the requisitions of their charter in organizing the institution. This doctrine seems to me to put an end to the liability of stockholders, if they desire to act fraudulently.

Neither do I concur in the opinion that the judgment creditor of the corporation has no rights beyond those of the corporation. If this were so, the stockholders and directors might release themselves and deprive the creditors of the means of procuring satisfaction. It is very common to set aside conveyances good between the parties, in favor of creditors. Those concerned in frauds are often left where they have placed themselves by their own acts; the law will not interfere between them. Yet, when their mutual acts operate to the prejudice of third persons, they will not be permitted thus to work out injustice.

In cases of partnership, a man by his conduct often renders himself liable as a partner, to third persons, who is not so as to the other partners. It is equally so in regard to joint stock associations. There is no reason for excluding the application of the principle from corporations; and it seems sometimes to have been extended to them. Adderly v. Storm, 6 Hill, 629; Centre Turnpike Co. v. M'Conaly, 16 Serg. & Rawle. If this principle be applicable, by subscribing for the stock, the defendant placed himself in a situation in which he might be held a stockholder by persons dealing with the corporation. They could not be required to ascertain whether all the terms of the charter in regard to subscription had been complied with. Both parties treated the subscription as valid; the payment, though not made at the time, was afterwards made,, and if this did not constitute him a stockholder at the time of the subscription, it did at the time of the payment. When both these acts concurred, it seems to me that nothing was wanting to make him a stockholder.

I cannot moreover, perceive how the defendant is to be held liable on the note, but discharged as a stockholder. The only consideration for the note, was the stock for which he subscribed, if he does not get that, he gets nothing for the note. He made but the one contract for stock, he made no purchase of it at any other time, and in my view, must either be bound for all or none.

With these reasons for my dissent, I submit my opinion with a distrust of its correctness, always felt, when I differ from the majority of the court.  