{ "id": 5114848, "name": "Mandel v. The Swan Land & Cattle Company", "name_abbreviation": "Mandel v. Swan Land & Cattle Co.", "decision_date": "1894-01-11", "docket_number": "", "first_page": "204", "last_page": "211", "citations": [ { "type": "official", "cite": "51 Ill. App. 204" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "12 Wheat. 64", "category": "reporters:scotus_early", "reporter": "Wheat.", "case_ids": [ 1429778 ], "opinion_index": 0, "case_paths": [ "/us/25/0064-01" ] }, { "cite": "33 Mich. 22", "category": "reporters:state", "reporter": "Mich.", "opinion_index": 0 }, { "cite": "27 Ohio St. 66", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 892546 ], "opinion_index": 0, "case_paths": [ "/ohio-st/27/0066-01" ] }, { "cite": "27 Ohio St. 311", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 892531 ], "pin_cites": [ { "page": "321, 324" } ], "opinion_index": 0, "case_paths": [ "/ohio-st/27/0311-01" ] }, { "cite": "38 Penn. St. 81", "category": "reporters:state", "reporter": "Pa.", "case_ids": [ 994131 ], "opinion_index": 0, "case_paths": [ "/pa/38/0081-01" ] }, { "cite": "43 Md. 203", "category": "reporters:state", "reporter": "Md.", "case_ids": [ 1848548 ], "opinion_index": 0, "case_paths": [ "/md/43/0203-01" ] } ], "analysis": { "cardinality": 681, "char_count": 16224, "ocr_confidence": 0.469, "pagerank": { "raw": 7.239035127921845e-08, "percentile": 0.4318964155825301 }, "sha256": "f876848ebb1337e6554a08f187f5e46b1b3ae889e9a95a238fd82224d383a9f4", "simhash": "1:0539f025d72a1271", "word_count": 2810 }, "last_updated": "2023-07-14T18:36:15.137575+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Mandel v. The Swan Land & Cattle Company." ], "opinions": [ { "text": "Mr. Justice Watermab\ndelivered the opibiob of the Court.\nIt is strenuously urged that section 39 of the articles of association is so unreasonable and unjust, that the courts will not enforce it; that this suit is an attempt to enforce a penalty created by the laws of another sovereignty, and that this is never done; and it is also insisted that appellant \u25a0was entitled to know what had been done with his forfeited shares, and to be credited with whatever the company had received therefor.\nWe see nothing unreasonable or unjust in the provisions of section 39, nor do we regard this suit as an attempt to enforce a penalty. Stockholders are presumed to know the provisions of the charter and by-laws of the companies in which they are members. Morawetz on Oorporations, Sec. 591.\nBy becoming a holder of stock having a par value of \u00a310 upon which \u00bfonly \u00a36 had been paid, appellant obligated himself to pay when duly called upon \u00a34 upon each of his shares; so soon as he was thus duly called upon to pay any portion of _ the unpaid \u00a34 the amount of such call became a debt.\nIt is for this debt that the present suit was brought.\nThe defense to it is based entirely upon certain of the articles of association, and what has been done thereunder. If they are so unjust and unreasonable that courts will not enforce them, the forfeiture of appellant\u2019s shares may be held to have been unwarranted and be set aside, but a defense to this suit will not therefrom arise; the debt of appellant will not thus be paid.\nThis suit is brought to collect a debt, not to enforce a penalty; the penalty provided by the articles of association was the forfeiture of shares; with whether such forfeiture was legal or illegal, warranted or unwarranted, binding upon appellant, or a thing- which affected him not, we have in this litigation nothing to do, and as to such declaration of forfeiture, the judgment in this case will establish nothing.\nWhether appellee has sold or still retains the forfeited shares, is in this action immaterial. Save and by virtue of certain provisions of its articles, it could not forfeit at all; if they are incapable of enforcement, or if the proceedings for forfeiture, taken thereunder, were unwarranted or inadequate, then appellant is yet the owner of the 380 shares, and any sale the company may have made of them is not binding upon him; if the forfeiture was in all respects regular and warranted, then the company became thereby the absolute owner of these shares and need not account for the proceeds thereof. The numerous cases cited by appellant to the effect that the amount of a call, for the non-payment of which' stock has been forfeited, can not be collected, are all in respect to companies whose by-laws contained no provision like section 39.\nBut for that section it might well be held that the company having elected under its powers to forfeit shares, could not recover the amount of the call, for the non-payment of which the forfeiture was made; while in the present instance the right to recover such call, notwithstanding forfeiture, is plain; to this appellant agreed; all stockholders stood as to this, upon an equality, and we see no re'ason why appellant should be allowed to get rid of his unmistakable agreement.\nThat the stockholder remains, notwithstanding forfeitures, liable to pay all calls due at the time of forfeiture, is, under provisions like section 39, held in England, and as we think with good reason. Dawes case, 38 Law Journal, N. S. 512.\nAppellant, in purchasing these shares, contracted with reference to the charter and by-laws of the corporation of which he became a member, and the laws of the country in which such company was created. Beach on Corporations, Sec. 148; Morawetz on Corporations, Secs. 874 and 875; First National bank of Deadwood v. Gustin Minerva Con. Mining Co., 42 Minnesota 327.\nWe do not regard section 26 of chapter 32, entitled Corporations, of the statutes of this State, as having any bearing' upon this case. Appellee did not undertake to do business in this State, and it is now merely attempting to enforce the payment of a debt created in and in accordance with the laws of another sovereignty.\nA corporation doing business in this State can not contract to receive more than seven per cent interest, but a corporation of another State, may in that State, make a valid contract for interest at any rate permissible with the laws of that State, and may in this State bring suit and recover judgment according to the law of the State where its contract was made. The validity of contracts is determined by the lex loei contradi. The relief afforded for a breach of contract is in accordance with the law of the forum where suit for breach is brought.\nThe authorities cited by appellant, to the effect that calls can not be made until the entire stock has been subscribed, have no reference to cases in which the corporation, as in this case, is authorized to begin and carry on its contemplated business before the stock has all been taken. Where a company, for the purposes of its being, is to come into existence only upon the full amount of its stock being subscribed, it is manifest that it coaid not make and enforce payment of calls ere it had passed its embryonic condition. Such is not the condition of appellee. Buckley on Companies\u2019 Acts,4th Ed. 19; Ornamental Pyrographic Co. v. Brown, 2 Hurl. & Colt. 63.\nIt is urged by appellant that it was incumbent on appellee to have its books actually present in court if it desired to show their contents; that it was not sufficient to, as was done, take by deposition the testimony of the secretary of the company and the custodian of its records at its office, the books being th\u00e9re produced, proven, and the entries desired to be introduced then and there copied and verified by the witness.\nThe entries, copies of which were introduced in evidence, were such as the company was by law required to keep; they were made when appellant was a stockholder, and therefore by his agents, and the copies were examined and sworn to by credible witnesses. See statutes of this State, Secs. 13 to 18, of chapter entitled Evidence; Greenl. on Ev., Vol. 1, Sec. 493, 13th Ed. see also Scarlett v. The Academy of Music, 43 Md. 203.\nThe making of the call for which suit was brought was proven by the testimony of witnesses as well as by copies of entries in the books of the company.\nThe making of a call is a fact which it is not indispensable should be proved by an introduction of or transcripts from the books of the company. Hays & Black v. Pittsburgh & Steubenville R. R. Co., 38 Penn. St. 81-90; Reynolds et al. v. Schweenfus, 27 Ohio St. 311, 321, 324; Ratcliff v. Teters, 27 Ohio St. 66; Tatmouth v. Koehler, 33 Mich. 22; Bank of the United States v. Dandridge, 12 Wheat. 64.\nThe opinion in this case being applicable to Frank v. Swan Land & Cattle Co., and Friend v. Swan Land & Cattle Co., at this term, the jugdment in each of said causes is affirmed.\nMb. Justice Gaby.\nIf the question were now whether there was any good cause for suppressing any part of the depositions I should say that there was, but a motion made upon specific grounds is to be sustained or denied upon those.\nThe principal objection made to the depositions was that no secondary evidence of the contents of the corporation books was admissible, but the books themselves must be put in evidence on the trial. The 15th and 18th sections of chapter 51, Evidence and Depositions, permit copies to be used either certified or sworn, and whether the contents of the depositions were partly testimony of the witnesses as to corporate acts which should be proved by the books, or competent copies, is a question not necessary to consider.", "type": "majority", "author": "Mr. Justice Watermab Mb. Justice Gaby." } ], "attorneys": [ "Otis & Graves, attorneys for appellant.", "Swift, Campbell, Jobes & Martib, attorneys for appellees." ], "corrections": "", "head_matter": "Mandel v. The Swan Land & Cattle Company.\n1. Penalties\u2014Suit to Enforce\u2014What is Not.\u2014A suit brought by a corporation to recover the amount of a call made by the directors upon shares of stock where the shares have been forfeited for the non-payment of the call upon which the suit is based, is not an attempt to enforce a penalty.\n2. Stockholders\u2014Presumed to Have Knowledge of the Company\u2019s By-laws.\u2014Stockholders are presumed to know the provisions of the charter and by-laws of the companies in which they are members.\n3. By-laws\u2014Result of Unreasonable Provisions.\u2014If the by-laws of an incorporated company are so unjust and unreasonable that courts will not enforce them, a forfeiture of a member\u2019s shares may be held to have been unwarranted and be set aside, but it will not be a defense to a suit brought by the company to collect assessments due upon the forfeited shares of stock of such member. Setting aside a forfeiture of his stock does not have the effect of paying his assessments.\n4. Stockholders\u2014Effect of Unwarranted Proceedings for Forfeiture.\u2014If the proceedings taken under its by-laws by an incorporated company, are unwarranted or inadequate, such proceedings do not affect a holder\u2019s title to his stock, but if such proceedings are regular and warranted, the company becomes the absolute owner of the stock.\n5. Stockholders\u2014Status After a Forfeiture of His Stock.\u2014A stockholder whose shares have been forfeited under the by-laws of the company remains, notwithstanding such forfeiture, liable to pay all calls due at the time of forfeiture, under bydaws with provisions creating such a liability.\n6; Stockholders\u2014Buying Shares\u2014Contracts with Reference to Bylaws.\u2014A person in purchasing shares in an incorporated company contracts with reference to its charter and by-laws and the laws of the country in which such company is created.\n7. Corporation\u2014Power to Contract for Interest\u2014Foreign Corporation Same.\u2014A corporation doing business in this State can not contract to receive more than seven per cent interest, but a corporation of another State may, in that State, make a valid contract for interest at any rate permissible by the laws of that State, and may in this State bring suit and recover judgment according to the law of the State where its contract was made.\n8. Contracts\u2014Validity\u2014Law of the Place\u2014Remedy.\u2014The validity of a contract is determined by the lex loci contractus. The relief afforded for a breach of contract is in accordance with the law of the forum where suit for breach is brought.\n9. Corporations\u2014Assesstnents upon Stock.\u2014The rule that assessments can not be made until the entire stock has been subscribed, has no reference to cases in which the corporation is authorized to begin and carry on its contemplated business before its stock has all been taken. Where a company is to come into existence only upon the full amount of its stock being subscribed, it can not make and enforce payment of calls before it has passed its embryotic condition.\n10. Evidence\u2014Records of Corporations.\u2014Copies of the books,-records, etc., of an incorporated company, examined and sworn to by a credible witness, are admissible in evidence to show that a call upon the stock has been made.\"\nMemorandum.\u2014Assumpsit. Appeal from the Circuit Court of Cook County; the Hon. F.RANK Baker, Judge, presiding. Heard in this court at the October term, 1893, and affirmed.\nOpinion filed January 11, 1894.\nStatement oe the Case.\nThis is a suit in assumpsit, brought in the Circuit Court of Cook County, on the 24th day of March, 1890, by the Swan Land and Cattle Company, limited, a corporation organized under the English \u201c Companies\u2019 Act,\u201d against Emanuel Mandel, to recover the amount of a call made by the directors of the company upon shares of stock standing in the name of the appellant, which shares the company had already forfeited for non-payment of the same call upon which the suit is based.\nThere was a trial by the court, a jury being waived, and a judgment in favor of the appellee for the amount of the call and interest, from which an appeal has been prosecuted to this court. The declaration alleges, in substance, that the appellee was a corporation duly organized under the \u201c Companies\u2019 Act\u201d of Great Britain, and that the appellant owned 380 shares of its stock of the par value of \u00a310 per share, on which only \u00a36 per share had been paid in, and that on the 11th day of October, 1887, a call was made of \u00a31, 2-s. per share by the directors of the company.\nThe declaration further alleged that the articles of association of the company provided for forfeiture of stock, in case calls thereon were not paid, and that notwithstanding such forfeiture, the shareholders should remain liable for the amount of any call due thereon at the time of \"such forfeiture, together with expenses and interest thereon; that after demand for payment of such call on the stock of the appellant, and on the 4tfy day of September, 1888, his shares were duly forfeited by resolution of the board of directors for non-payment; and it is claimed that the appellant, not having paid such call, is still liable for the full amount thereon, with interest, notwithstanding the forfeiture of his shares for its non-payment.\nThe appellant interposed pleas of nul tiel corporation and the general issue.\nThe printed statute of Great Britain, comprising what is generally known as the English \u201c Companies\u2019 Act\u201d of 1862, with its amendments, was offered in evidence. This statute in substance provides that seven or more persons, by subscribing their names to a memorandum of association, and otherwise complying with the statute in respect of registration, may form an incorporated company, with or without limited liability. The act contains the usual provisions prescribing the powers and duties of corporations, the manner in which they can be created, their business conducted, and how their affairs may be wound up and put into liquidation in case of insolvency.\nSection 16 of said act is as follows:\n\u201c The articles of association shall be printed, they shall bear the same stamp as if they were contained in a deed, and shall be signed by each subscriber, in the presence of, and be attested by, one witness at the least, and such attestation shall be a sufficient attestation in Scotland as well as in England and Ireland; when registered, they shall bind the company and the members thereof to the same extent as if each member had subscribed his name and affixed his seal thereto, and there Were in such articles contained a c Dvenant on the part of himself, his heirs, executors and administrators, to conform to all the regulations contained in such articles, subject to the provisions of this act; and all moneys payable by any member to the company, in pursuance of the conditions and regulations of the company, or any of such conditions or regulations, shall be deemed to be a debt due from such member to the company, and in England and Ireland, to be in the nature of a specialty debt.\u201d\nSection 39 of the articles of association or by-laws is as follows;\n\u201c Any member whose shares have been forfeited, shall, notwithstanding, be liable to pay, and shall forthwith pay to the company, all calls, installments, interest and expenses owing upon or in respect of such shares, at the time of the forfeiture, together with interest thereon from the time of forfeiture until payment, at the rate of five per cent per annum, and the directors may enforce the payment thereof if they think fit.\u201d\nAppellant took an assignment of 304 shares, sending the deed of assignment to the company. Afterward, upon a second issue, seventy-six additional shares were issued by the company to him; he also received three dividends, two of which were upon his entire 380 shares.\nThe par value of each share was \u00a310. Upon the shares owned by appellee, \u00a36 only had been paid. The directors, in accordance with powers given to them by the articles of association, on October 21, 1887, made a call of \u00a31, 2s., upon each share, which, upon appellant\u2019s shares, amounted to \u00a3418. Notice of this call was mailed to appellant, and he having failed to make payment, his stock was declared forfeited to the company.\nThis action is brought to recover the call of \u00a31, 2s. per share, for non-payment of which said forfeiture was declared, being based upon section 39, above quoted.\nOtis & Graves, attorneys for appellant.\nSwift, Campbell, Jobes & Martib, attorneys for appellees." }, "file_name": "0204-01", "first_page_order": 200, "last_page_order": 207 }