William Wright vs. Vermont & Massachusetts Railroad Corporation, 12 Cush. 68

Shaw, C. J. This is an action brought by the plaintiff as a stockholder in the Vermont and Massachusetts Railroad Corporation, to recover several sums alleged to be due and payable to him from the corporation. The case comes before us upon an agreed statement of facts, and the claim is placed by the plaintiff on the votes of the stockholders.

Supposing the original vote of the stockholders should be regarded as declaring a general right of the stockholders, previously to paying in any instalments on their shares, that each should be entitled to interest, to be computed on his payments, from the time of each payment to the time when the railroad should go into operation, and be in a condition to earn income and pay dividends, this would be equitable, because it would put stockholders on an equal footing, whether they should pay earlier or later.

It would encourage capitalists to advance their money early, to meet the exigences of the company before it could enjoy any income ; and it seems right that the use of such capital should be paid for as a common charge on all. But a general declaration, and the adoption of an equitable arrangement, was indefinite in its nature, fixed no time, or mode, in which such interest should be paid, and looked to no contingency on which it should be paid other than the completion of the road.

Subsequently the directors passed a vote fixing the time of the first computation of interest to September 1,1847, probably with the expectation of issuing new stock, and providing that these sums of interest should be received in payment therefor. Afterwards, the directors, under the same authority, fixed another time to which interest should be computed, (October 1, 1848,) being thirteen months from the former payment of interest, to be paid by being received on instalments on new stock, or the bonds of the company at ninety per cent., at. the option of the stockholders.

But there was no provision foi the payment in money. These were paid accordingly. The directors never fixed any time for the third payment of interest. The directors voted, April 10, 1849, that no interest should accrue or be payable after April 15, and thus fixed, as far as they had authority to do it, the time to stop the running or accruing of interest; but they did not fix a time for the payment of interest, or direct the manner; whether by cash, bond, scrip, or otherwise.

Taking the legal obligation of the company to pay interest, on the ground on which the plaintiff places it, interest was not payable annually, or at any other period ; because the votes did not so provide. We think there was no implied promise to pay interest annually, even if such promise might be implied from undertaking to pay money at a distant day, with interest in the mean time, because, here was no debt, no principal sum, to be paid.

The directors have put no practical construction upon the votes, by paying annually, because the first and second payments were not at an interval of a year, but of thirteen months ; and besides, the last payment was not to be made in money. Further; if anything made it an annual payment of interest, this action, commenced July 3, 1849, was premature, being within a year from the former time of payment. In any way in which we can consider it, the plaintiff had no cause of action when the suit was brought.

The book made up by the treasurer, stating how much would be due to each on the 15th of April, on which some reliance was placed, does not appear to have been made in pursuance of any order of either stockholders or directors. It was a blank book prepared by the clerk, to be signed by the stockholders, if any vote should pass under which they should receive their pay. No such vote ever did pass. It is of no authority as evidence.

Whether the plaintiff might or not maintain an action to recover this claim when the road should be completed and put in operation, we do not perceive how he could do it before that time, without some vote of the corporation fixing the time of payment, and making it payable in money. Great stress was laid by the plaintiff on the vote of the directors of April 10, 1849, stopping all interest after April 15, though it was denied on the other side that the directors had any authority to pass such a vote.

No doubt this time (15th of April, 1849) was fixed as the time for stopping the payment of interest to stockholders, because that was the time fixed for payment of the last instalment on the third issue of stock. As no more advances could be made, it was probably considered that, whether every stockholder should receive interest on what he had paid, or no one should receive any, it would really make no difference, because each would be bound to pay in the same proportion in which he would be entitled to receive.

But whatever might be the authority of that vote, on the grounds on which its validity is questioned, we cannot put the construction upon it, that it directed the interest to be paid up to that time, in cash and on demand; no such construction is warranted by its terms, or by any previous vote ; and we think it would be a forced and untenable one.

The court are therefore of opinion, that whether that vote was unauthorized and void, or valid and effectual for the purposes for which it was intended, it was not a vote giving a present debt to the stockholder, and a right to maintain an action to recover it, and therefore that this action cannot be maintained. Judgment for the defendants.