
    ANN ELIZA MITCHELL, Executrix, et al., Plaintiffs and Respondents, v. THE VERMONT COPPER MINING COMPANY, et al., Defendants and Appellants.
    ASSESSMENT UPON THE CAPITAL STOCK OF A CORPORATION BY THE DIRECTORS THEREOF.
    Sale of said stock, when the owner thereof neglects to PAT THE ASSESSMENT.
    Validity of sale depends upon the same being made strictly within the powers authorizing the same, namely : the law of the state wherein the corporation exists, and the charter and by-laws of the corporation,
    A corporation can not enact or pass a by-law, or any rule or resolution for its government, except within the state under whose laws it is organized, and where it has a corporate existence.
    
      Before Curtis and Sedgwick, JJ.
    
      Decided February 7, 1876.
    Appeal from judgment entered upon the decision of a judge at special term.
    The plaintiffs’ testator had been a stockholder in the Vermont Copper Mining Company, defendant. That company had sold, or claimed to have sold, the stock of the testator, for non-payment of assessment thereon. The defendant Ely had bought, or claimed to have bought, the stock, at the sale. The defendant Ely was also president, and the defendant Bicknell, treasurer, of the company. The plaintiffs demanded judgment that the defendants, the company and Ely, might be enjoined from consummating the sale, and from causing or permitting certificates of the stock to be issued, and that the defendants Ely and Bicknell be restrained from signing or issuing any certificate, &c., and that, the pretended sale be annulled.
    Nothing turns upon the form of the remedy or upon the validity of the assessments upon the stock. No> special argument as to either was made upon this appeal.
    The company was incorporated by the laws of Vermont. Its board of directors made an assessment of twenty cents upon each share of its stock. This assessment was part of an assessment of fifty cents, previously authorized, and thirty cents having been imposed. Both assessments were made under the following by-law of the company, viz.:
    The directors shall have the power to assess the stock, not to exceed fifty cents per share, to fnrnish means for carrying on the operations, or paying the debts, of the company, and in case any stockholder shall neglect or refuse to pay such assessments, shall empower the treasurer to sell by public auction the shares of such delinquent, pursuant to section 12 of chapter 86 of the general statutes of the state of Vermont.
    
      This twelfth section provided, “That when any proprietor of any private corporation shall neglect or re-fuse to pay any tax or assessment duly laid or assessed by said corporation, agreeable to the by-laws thereof, the treasurer may sell by public auction the shares of such delinquent, under such regulations as the corporation by its by-laws may direct,” and further, that “The excess, if any, after paying such tax or assessment and all proper charges, shall be paid by the treasurer to such delinquent on demand.”
    The board of directors adopted the following resolution : “ Whereas an assessment of thirty cents a share upon the capital stock of this company was laid payable on February 15 last, and another assessment of twenty cents per share payable on August 8 last, and whereas said assessments have not all been paid, therefore Resolved, that the treasurer is hereby empowered to sell the stock upon which said assessment shall remain unpaid, at public auction, in accordance with the by-laws.”
    Afterwards, at a meeting of the stockholders in the city of Yew York, the following amendment was made to the by-laws :
    “ When the stock of any stockholder shall be ordered by the directors to be sold for unpaid assessments, such sale is to be made in the city of Yew York, by such auctioneer as the board shall direct, and between eleven and three o’clock of the day, and notice thereof to be given, at least ten days before the sale, to the delinquent shareholder, either personally or by mail, and also by publication for a like period in one or more of the daily newspapers of the city of Yew York.”
    It was proved that the company published the following notice, signed by the treasurer:
    “ The following described shares of the capital stock of the Vermont Copper Mining Company,, standing in the name of the following parties, viz. (here was inserted the description of the shares belonging to several alleged delinquents, among them those of the plaintiff’s testator), will be sold for the payment of assessments due thereon, by Albert H. Nicolay, at public auction, on Monday, September 17, at one o’clock, p.m., at the office of the company, at No. 191 Broadway (room 11). By order of the board.”
    The judge found as facts:
    That on September 17, 1866, the said ten thousand nine hundred and forty-one shares of the said Samuel L. Mitchell of the stock of the said company were •exposed for sale by the company, at their office, in the third story of the building, No. 191 Broadway, in the city of New York, for non-payment of the said assessment of twenty cents a share. Notice of such sale was ■publicly given in two of the daily newspapers of the city •of New York, at least ten days before the sale ; but no notice was received by the said Samuel L. Mitchell, -either personally or by mail, nor is it satisfactorily proven that a notice was mailed to him. He, however, saw the publication before the sale. That no auctioneer was directed by the board of directors of said company to make such sale, and that no other action on the part •of the said company or its board of directors in respect •to said sale took place than as has been hereinbefore stated. That at such sale the whole ten thousand nine hundred and forty-one shares of stock of the said Samuel L. Mitchell were put up, and that the whole thereof were knocked down to the name of the defendant Ely, atone dollar and fifty-two and a half cents a share. That the defendant Ely was at the time the president and a director of the said company.
    That prior to said sale the said Samuel L. Mitchell had objected to pay the said assessment of twenty «cents a share upon his ten thousand nine hundred and forty-one shares of stock, but that he had stated to the said Ely, the defendant, that if he, as president of the said company, would assure him, .the said Samuel L. Mitchell, that the accounts of the treasurer were correct, he would pay the -said assessment, and that the-defendant Ely had declined to give such assurance.
    The learned judge further found as facts, that j ust before the sale took place, the plaintiffs’ testator directed his check to be drawn for the amount of the assessments, and the same was by his further direction tendered, at the office of the company, to the defendant Ely, as president, in payment of the assessment; that the defendant Ely declined to receive the same, made-no objection to the check or to its amount, but said that it would affect the sale to have the stock of the plaintiffs’ testator then withdrawn, that he would buy-in the stock, and the assessments could then be paid ; that the stock was knocked down at the sale to file-name of the defendant Ely, and that after the sale, he requested the agent who made the tender to inform plaintiffs’ testator and to desire him to send the company the amount of the assessment; that notwithstanding this the said agent, as further directed, publicly protested at the sale against the sale of the shares belonging to plaintiffs’ testator; that the defendant Ely did not pay for the stock, in whole or in part, and had not, down to the trial; that after the sale, and as late as the year 1868, defendant Ely requested the testator of plaintiffs to pay the assessment,., and stated that upon the payment, the stock would be-his ; that, at a meeting of the directors, at which defendant Ely was present, May 15, 1868, it was resolved that the stock of Mr. Mitchell (plaintiffs’ testator),, bought, by Mr. Ely, at a sale for assessment, on September 17, 1866, “ having been by him repeatedly offered to the company at the cost to him, we accept his proposition and the stock held by him subject to our order.’*' This resolution was rescinded on August 16, 1868.
    
      The judge further found, “that it was not proved that any written note or memorandum was made or given in respect to the said alleged sale, and it was proved that no payment was made on account.”
    The judge found as matter of law :
    1. That the purchase of the stock by Ely, a director and president of the corporation, was ineffectual to make a valid sale of the stock, unless the same should be adopted or approved by Mitchell, the stockholder, and that he not having approved of, adopted, or acquiesced in said sale, was not, nor are the plaintiffs bound thereby.
    2. That to sell the said stock for the non-payment of an assessment, required that the sale should be made after due notice of ten days to the stockholder, and by an auctioneer directed by the directors, and that the said sale of September 17, 1886, was irregular for the want of such direction and notice.
    3. That to make a valid and binding sale of such stock for the non-payment of an assessment, required a written note or memorandum signed by the purchaser, or by some other person by his authority, or a payment of fifty dollars on account, and that the purchase claimed by the defendant Ely was invalid for want of these requirements.
    4. That to entitle the defendant Ely to claim the purchase of the said ten thousand nine hundred and forty-one shares of stock, required that within a reasonable time from September 17, 1866, he should pay for the same, inasmuch as it was upon payment by him alone that the said Samuel L. Mitchell would be entitled to receive the surplus over the amount of the claimed assessment.
    5. That however the preceding propositions of law might be, the tender by the said Samuel L. Mitchell of the amount of the said assessment prior to the sale, put it out of the power of the said company to make a valid or effectual sale of the said ten thousand nine hundred and forty-one shares of stock.
    6. That the plaintiffs, who are the executrix and executors of the said Samuel L. Mitchell, who, pending this action, has died, are entitled to judgment, and to the judgment herein ordered, and that it be and is adjudged that the defendants, the Vermont Copper Mining Company and Ely, be enjoined and restrained from taking any proceedings for the consummation of the said pretended sale, and from causing or permitting certificates to be issued for the said stock ; that the defendants Ely and Bicknell be enjoined and restrained from signing or issuing any such certificates ; that the said pretended sale be vacated and annulled; and that the plaintiffs recover of the defendant Ely the costs of this action.
    
      Moses Ely, for appellants.
    
      John E. Parsons, for respondents.
   By the Court.—Sedgwick, J.

It was not contended that, under the statute of Vermont, there was a forfeiture of the stock upon non-payment of the assessments. It was tacitly conceded that the title of the delinquent would not pass from him until a sale had been made, by valid proceeding, under the statute, to a purchaser. The statute provided that any excess of the purchase price, beyond the assessment and all proper charges, should be paid to the delinquent. Down to the sale, the interest of the company was the amount of the assessment and the proper charges, and the company had not a title to the stock. Therefore the plaintiffs were entitled to the stock and the evidences thereof, unless the proceedings to the sale were those made by law, to divest the title, or if before a sale there was a tender to the company of the amount of the assessments and charges. It must be conceded that the steps contemplated by law must be made in strict compliance with the law.

The validity of the sale depends upon compliance with the by-law of December 19, 1859, passed in the city of New York, in connection with the other by-laws and statute, or upon a construction of such other bylaws and. the statute, apart from the by-law of December 19, 1859.

I think the learned judge was correct in deciding, that after the plaintiffs’ testator (who was alive at the time of trial) had shown his general title to the stock at a former time, and that he had received no notice of the sale, either personally or by mail, the burden of proof was upon the defendants to show the taking of all the steps necessary for the passing of the title. The answer claimed that there had been a sale. Perhaps not so much was necessary to place the burden of proof upon the defendants. The defendants examined witnesses to show that notice had been given through the mails. The testimony was not positive or definite as to the particular notice to the plaintiffs’ testator. It was of a general kind, that all the notices had been sent by mail to the delinquents. How much of the testimony, as to the particular notice, was an inference by the witness, and how much doubt, if any, there was in the witness’s mind, was perceived by the judge before whom the witness was in person, and can not be estimated as well by an appellate court. His judgment on the subject must be final, as it would have been if he had given a greater weight to the testimony on this point. It is the fact, then, that the notice by mail, or personal, was not given, and the defect is fatal. The defect is not cured by the proof that the notice, as published, was seen by the plaintiffs’ testator. He could rest upon the law that such a notice, alone, would not support a sale that would divest his title.

It is claimed, however, and correctly, that the bylaw of December 19, 1859, was invalid as such,, because being in the nature of a corporate act, it was passed in New York, out of Vermont, in which alone a corporate act would be valid. But in looking to the other by-laws made in Vermont, and to the statute off that state, we see that the sale was not authorized by them. There was a resolution of August 16, 1865, referring in part to the present assessment, “that the-treasurer is hereby empowered to sell the stock upon which said assessments shall remain unpaid, at public auction, in accordance with the by-laws.” The only by-law in evidence is, after giving the directors-power to assess, that the directors “in case any stockholder shall neglect or refuse to pay such assessment, shall empower the treasurer to sell by public auction the shares of such delinquent, pursuant to section 12 of chapter 86 of the General Statutes of the state of Vermont.” The statute itself was that “ the treasurer may sell by public auction the shares of such delinquent, under such regulations as the corporation by its by-laws may direct.” By the statute and by the by-laws no sale could be made without regulations for it being first made by the by-laws.' There were no such regulations, and there could, therefore, be no valid sale.,

I think also that the tender of the amount of the assessment as against the company and the defendant. Ely, who had knowledge of the tender, availed to deprive the company of power to proceed (after it was-made) to sale, even if the proceedings were regular. As to whether, in fact, the tender was made, we are-content with the finding of the judge, supported as it is by one positive witness and corroborating circumstances. We have seen that the title of the stock was: in plaintiff’s testator, and that it was only charged with the right of the company to obtain by its sale the amount of the assessments and proper charges. The rights of the company would have been satisfied and discharged by a payment. The rejection of the tender was not placed upon a deficiency of amount, or that it was not in money. Strictly there should have been an offer to pay the charges, and proof of ability .and readiness to do it, upon being informed as to what they were. The necessity for this was obviated by the defendant Ely saying, among other things, that he would buy-in,for plaintiff’s testator, and the assessment could be paid afterwards ; that it would break down the sale to withdraw those particular shares, &c., &e.

This being true, however, if the judgment below could be supported on no other ground than that of tender, it should have provided that the tender should be kept good, and the plaintiff pay the money and interest and charges as a condition of relief. Equity would not require this, however, if the alleged or attempted sale was invalid for want of legal proceedings, or if, in fact, the sale was only colorable, ¡and not, in fact, a sale as between the company and the defendant Ely. In neither case would any right -of the plaintiff rest upon the making of the tender.

I do not think it expedient in this case to examine whether the mere fact of there being no contract of sale under the statute of frauds, binding the company and defendant Ely, would of itself give the plaintiff a right to claim that no sale had taken place or was invalid for that reason. But undoubtedly the learned judge was right in giving attention to the fact that the defendants had not proved such a contract. That fact with others, viz., the declaration before the sale that it would be bought in for the plaintiff’s testator, the subsequent declaration that he might still have the ¡stock upon the payment of the assessment, the resolution of the company, at which defendant Ely was present, afterward rescinded, that the stock of Mr. Mitchell, bought by Mr. Ely at a sale for assessment, “having been by him repeatedly offered to the company at the costs to him, we accept his proposition and the stock held by him,” and the non-payment by defendant Ely of the purchase-money—was evidence as to whether the sale that took place was meant to be more than a form, and whether either party had an intention to make a sale or purchase. These facts, too, might all be weighed on the question as to the tender. I do not, however, proceed in supporting the judgment upon the mere fact that there was no real sale. It is not necessary, and it may be that the judge below had no such question by itself before him. The judgment below can be affirmed on the invalidity of the sale under the statute of Vermont and the by-laws of the company.

In what has already been said, the propositions made in the strong argument by appellant’s counsel have been considered directly or inferentially for the most part. He particularly urged that a tender to defendant Ely was not a tender to the company, because there was no evidence that he had charge of the fiscal concerns, and had no implied authority to receive money in payment of indebtedness. The proposition of law involved might be sound, yet we should consider that there was evidence that at the time of the tender the treasurer of the company was standing by, so that he was able to testify to what took place at the interview, although his remembrance of it was not the same as that of a witness for the plaintiff.

It is unnecessary to give attention to the argument, in relation to the conclusion of law by the judge, “that the purchase of the stock by defendant Ely, a director and president of the company, was ineffectual to make a valid sale of the stock, unless the same should be adopted or approved by Mitchell, the stockholder, and that he not having approved of, adopted, or acquiesced in said sale, was not, nor is the plaintiff bound thereby.” An examination of the law on this subject is not required in this case, as we have come to the conclusion that the sale was invalid for other reasons.

The judgment should be affirmed with costs.

Curtis, J., concurred.  