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$100,000 paid thereon. No special provision is made in the charter for the time and mode of paying subscriptions. The company was organized 12th December, 1865. Twenty per cent. of each share subscribed was paid in cash. It ceased business 20th September, 1866, and made an assignment for the benefit of its creditors, including in the assignment the unpaid amounts on the subscription to its stock. The assignee not proceeding properly, a bill was filed in the court of chancery at Richmond in behalf of creditors 7th November, 1871, to enforce the collection of assets and payment of the debts. On 14th December, 1880, a decree was made establishing debts to the sum of $500,000, removing the assignee, appointing plaintiff trustee, and ordering calls on unpaid subscriptions, first for 30 per cent., then for the whole sum unpaid. The defendant was an original subscriber for 50 shares, and paid his 20 per cent. This action was brought on 2d August, 1886, to enforce payment of the remainder. On 12th January, 1876, defendant was adjudicated a bankrupt. On 4th January, 1878, he received his discharge. He sets up in defense to this action his discharge in bankruptcy and the statute of limitations.

CONCLUSIONS OF LAW.

As to the effect of the discharge in bankruptcy. Was the defendant released from this liability? He was, if this be a debt, claim, liability, or demand provable against his estate. Rev. St. U. S. § 5119. The able counsel for plaintiff contends that the remainder of the subscription for the 50 shares made by defendant was not a debt due and payable by the defendant when he was adjudicated a bankrupt, and that it was not a debt payable at a future day, (section 5067;) but that it was a contingent liability, the contingency whereof did not occur before the final dividend on the bankrupt's estate was declared, and that the present value thereof could not be ascertained. It was therefore not a liability included in the provision of section 5068, was not a provable debt, and was not released by the discharge.

The charter of this company authorized a certain capital, divided into shares of $100 each. Every subscriber, when he made his subscription, agreed to take and pay for each share taken $100. Mor. Priv. Corp. $271. There is nothing in the act of incorporation allowing the company or its board of directors to reduce the value or price of the several shares, or to permit a subscriber to pay a part of the subscription price and be released from further payments thereon. There is nothing in the case. to create the impression that any attempt was made to do this. If any such were made, it would have been null and void as to creditors. Sagory v. Dubois, 3 Sandf. Ch. 501; Sanger v. Upton, 91 U. S. 60. Nor was there anything said or done at the time of the subscription making the payment thereof conditional or contingent. For the same reason this also would have been void as to creditors. At the time of the subscription 20 per cent. only was paid in cash. This could not discharge the liability to pay the remaining 80 per cent., nor make it depend on a contingency. Sawyer v. Hoag, 17 Wall. 620; Curran v. Arkansas, 15

FEDERAL REPORTER, vol. 39.

How.307. The liability to pay was fixed; the time-the precise moment when to pay-may have been uncertain. The subscription was an absolute promise, debitum in præsenti, a part possibly, solvendum in futuro. Re Iron Works, 20 Fed. Rep. 680. It constituted a part of the assets of the company, (Myers v. Seeley, 10 N. B. R. 411,) and as such was by it assigned for the benefit of the creditors,-became the property of the creditors, (Sanger v. Upton, supra; Morgan Co. v. Allen, 103 U. S. 498.) The subscriber was bound to pay it in full. If the corporation had been successful and thus in the uncontrolled direction of its own affairs, it may possibly have indulged its stockholders. Perhaps if its profits were sufficiently large it may have declared dividends with which the stockholder could have been credited upon his debt for subscription and in time have so paid up the debt. But when the insolvency occurred, in 1866, its capacity to do business was ended. istence continued for no other purpose than the realization of its assets It lost all self-control. Its exand the payment of its debts. Its duty and the duty it devolved on its assignee was to collect in these assets immediately among them the unpaid subscription to stock and to pay the creditors. Scovill v. Thayer, 105 U. S. 154. This made the obligation of the subscriber to pay fixed and certain, immediate on demand; in other words, a debt. Works, 20 Fed. Rep. 680. No action of the corporation, of its offices Re Iron or its assignee, could discharge, alleviate, or extend this obligation. Upton v. Tribilcock, 91 U. S. 48; Sanger v. Upton, supra. scriber was permitted to pay only 20 per cent. in cash. But the subments were to be made on calls by the company or its officers. The The other paytime or times, the proportion or proportions, of these calls were uncertain. It may be they were contingent upon the necessities of the company. Does this deprive the debt on the subscription of its provable character in bankruptcy? Here, then, we have an absolute promise to pay whenever called, "that is to say, a demand existing, the accrual of the cause of action thereon dependent on a contingency,"-the call. If so, it is provable in bankruptcy. French v. Morse, 2 Gray, 111. Let us assume that a call was necessary before payment could be required; that such call might never have been made, either through neglect of the corporation, its assignee, or its creditors; that thus the remainder of the subscription was "payable upon an event which might never have occurred," yet the contract of subscription and the liability of the defendant to pay were in full force when the petition of bankruptcy was filed. The sum for which he could be made liable was certain in amount,$80 per share. In the language of WAITE, C. J., in Wolf v. Stix, 99 U. S. 1, this clearly is such a case as was provided for in section 5068, Rev. St., and the debt was provable in bankruptcy. See also Parbury's Case, 64 Eng. Ch. 87. Let the complaint be dismissed.

This result renders unnecessary any discussion of the defense of the statute of limitations.

NOTE BY THE JUDGE. In the case of Hawkins v. Glenn, 9 Sup. Ct. Rep. 739, (May 13, 1889,) the supreme court of the United States decide that the statute of limitations is not a bar. That case was brought by the same plaintiff as in our case against a subscriber in like plight.

BARD V. BAGAN.

(Circuit Court, D. Connecticut. June 17, 1889.)

1. PRINCIPAL AND AGENT-COMPENSATION OF AGENT.

Defendant, an experienced and successful rubber manufacturer, was employed by plaintiff's company, which was then in financial difficulties, and not succeeding well with its rubber business, to take entire charge of the business as managing agent, and as a part of the transaction he purchased 4,00 shares of its capital stock at a low price. He devoted his attention and active services to the business for over four years, when the company became insolvent. Frequently during the first year or two he stated that he was serving without compensation, but in this action, involving his right to a salary, he testified that he supposed his salary would be determined at the proper time, when the company became more prosperous, and that he would then be paid what was right for the past. There was no evidence of a contrary agreement. Held, that he was entitled to a reasonable salary ($2,500 per year) from the beginning of his employment.

2. CORPORATIONS-PREFERRED STOCK-UNAUTHORIZED ISSUE.

A purchaser of preferred stock issued without express statutory authority, who voluntarily subscribed and paid for it for the purpose of promoting the scheme under which it was issued, and who was a promoter of the scheme, cannot hold it for 28 months after the conditions upon which it was issued have been fulfilled, and then, on the insolvency of the company, assert the invalidity of the stock, and recover back his money.

At Law Action by Charles Bard, receiver of the Hayward Rubber Company, against Joseph Banigan, for money had and received. Halsey & Briscoe, for plaintiff.

Doolittle & Bennett, for defendant.

SHIPMAN, J. This is an action at law which was tried by the court, the parties having by a duly signed written stipulation waived a jury trial, and agreed to a trial by the court. The first count of the complaint was for money had and received by the defendant for the use of the Hayward Rubber Company, before the appointment of a receiver. The second count was for money had and received for the use of the plaintiff, after his appointment as receiver. A stipulation between said parties is as follows:

"It is stipulated and agreed by and between the plaintiff and defendant in the above-entitled action that the balance due to the plaintiff from the defendant under the first count of the substituted complaint, exclusive of the disputed items of $21,808.40 claimed by the defendant for services as general manager, and of $17,550 had and received by Hayward Rubber Company in payment of preferred stock, is the sum of $10,494.96, with interest thereon from December 15, 1887, and that the balance due to the plaintiff from the defendant under the second count of the substituted complaint is the sum of $24,011, with interest from January 15, 1888."

The facts which upon such trial were found to be true, and which are true, are as follows:

The Hayward Rubber Company was a joint-stock corporation, for the manufacture of India rubber shoes, duly incorporated in accordance with the statutes of Connecticut, and located in Colchester, in this state. Its

FEDERAL REPORTER, vol. 39.

Mr.

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capita stock was $400,000. The par value of its shares was $25. Before 1879 it had been a very profitable company, and had paid large dividends. Its last dividend was made in 1881. Thereafter its business deteriorated, and became unprofitable. In January, 1883, some of the principal stockholders endeavored to find a skilled rubber manufacturer, who would become interested in the company, and would oversee or direct its management, and would take the charge of selling its goods. Negotiations were entered into with the defendant, Joseph Banigan, who was president and general agent of the Woonsocket Rubber Company, and was a well-known and successful rubber manufacturer, which resulted in their agreeing to furnish him, and his agreement on January 12, 1883, to purchase, 4,000 shares of the capital stock of said company, at $12.50 per share. The agreement was carried out, and on January 30, 1883, Mr. Banigan was appointed general agent by the directors, who defined his duties, which were, in general, that he was to have full control of the manufacturing, subject to their approval. No salary was then or ever designated, nor was any vote passed on the subject. Banigan still attended to his duties and business at Providence. went to Colchester once in a week or fortnight, remaining there one, two, or three days, as the case might be. He entered actively upon the oversight of the business; laid out and arranged for new buildings; bought new machinery; ordered new lasts, tools, rolls, and cutting machinery; had automatic sprinklers put in the mill,—all at an expense of some $120,000; inspected the new goods; secured the dismissal of old officers, appointed a new superintendent; caused a saving in the management of the business; and reduced the pay-roll, while not reducing the quantity of manufactured goods; and carried on correspondence with the new superintendent and the treasurer. for three months, when he was in Europe. In April, 1883, the WoonHe also purchased the supplies, except socket Rubber Company, 40 or 50 per cent. of the stock of which Mr. Banigan owned, became the selling agents of the Hayward Rubber Company, and so continued until 1886. manufacturing companies formed a corporation called the Rubber Boot At that time the various rubber & Shoe Selling Company, in which each company took stock, and which was to sell all the production of all the stockholders. The Hayward Rubber Company took about $24,000 of stock. The agency continued a year, with disastrous results, particularly to the Hayward Rubber Company. The Woonsocket Rubber Company then declining to be its selling agent, Mr. Banigan became such agent, and sold all the goods thereafter, upon the same commission which had been paid to the Woonsocket Company. The amount of commissions was paid. In March, 1885, a committee of the directors, of which committee Mr. Banigan was a member, sent a circular to the stockholders, recommending an increase of the capital, by the issue of preferred stock to the amount of $100,000, saying that it was desirable to have a unanimous vote in favor of the proposition, asking for proxies, and inclosing the proposed resolutions, which were to be submitted to a stockholders' meeting to be held on March 25, 1885. At said meeting the stock was increased $100,000,

by the authorization of the issue of preferred stock entitled to cumulative dividends of S per cent. per annum, which should take precedence of all dividends on the common stock and any future additions thereto, and which preferred stock could be retired when the financial condition of the company would warrant, in such amounts and at such times as might be determined on by vote of the stockholders, at par and accrued dividends, and such retirement should be pro rata. The votes in regard to the issue of preferred stock were passed by a unanimous vote of the shares present or represented at said meeting at a time when said votes were taken; being 13,404 shares. The whole number of shares was 16,000. One stockholder of record holding stock hypothecated to it, subsequently brought to the proper state court a petition for an injunction against the issue of said preferred stock, but discontinued or withdrew said petition. Each stockholder had the privilege of subscribing to said preferred stock in proportion to the number of shares of existing stock by him owned. If any stockholder neglected, for a specified time, to subscribe for his portion of preferred stock, the same could be disposed of by the treasurer, for the use of the company, at not less than par. Mr. Banigan subscribed for 702 shares of the preferred stock, and on April 2, 1885, paid the company therefor $17,550, and received a certificate for said shares, which contained, in substance, the provisions of said votes. Shares to the amount of $25,000 in all were subscribed for. The subscription agreement which Mr. Banigan and the other subscribers signed was as follows: "We, the undersigned, herewith subscribe for the number of shares of the preferred stock of the Hayward Rubber Company affixed opposite our names." The defendant voted upon his stock at one or two annual meetings thereafter. On June 26, 1885, he wrote to Potter, Lovell & Co., note brokers of Boston, inclosing a statement of the company's affairs, and saying that it had arranged to issue $100,000 preferred stock, but "only one-quarter of it has yet been issued, which I have taken principally." No claim for the repayment of this $17,550 was made until 1888. No certificate of the increase of capital stock was filed in the office of the secretary of state, or of the town-clerk of Colchester.

Mr. Banigan continued to be the general agent until the company went into the hands of a receiver, on August 9, 1887. No charge was made by him on the books of the company and no claim was made for salary until after the appointment of the receiver. At the annual meeting of the stockholders in January, 1884, he said to them that he was serving the company without compensation. At another subsequent meeting of the stockholders, when his management was criticised, he justified it, and said that he was not receiving compensation for his services. On May 26, 1887, he wrote to the treasurer criticising a neglect to receive the company's goods from the selling company, and said: "I am not under pay by the Hayward Rubber Company, and I should not be expected to look after such business, but, if no one gives it any attention, I feel it incumbent on myself to protect the company." He testified, upon cross-examination, that he supposed his salary would be

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