Ashton v. Burbank.

legislative assembly of Illinois passed an act as follows: 'An act to amend an act to incorporate the Provident Life Insurance and Investment Company,' approved February 13, 1865.

"SEC. 1. Be it enacted by the people of the state of Illinois, represented in the general assembly, That so much of section 1 of said act, to which this is amendatory, as relates to the name and style of the corporation, and sections 5 and 15 of the said act, to which this is amendatory, be, and the same are hereby, repealed.

"SEC. 2. The name and style of the company shall be and is Eagle Insurance Company, and the said company may transact fire, marine, and inland insurance; and may hold an annual meeting of the shareholders on the first Tuesday of July, for the election of thirteen directors, to serve until their successors be chosen.

"Approved March 3, 1869.'

"The defendants neither procured nor assented to said last mentioned act, nor did they know of it until after its passage, and thereupon they protested against it, and refused to pay the note in suit on this ground. Subsequently the said Eagle Insurance Company ceased to do business, and this note, among other assets, was sold to the plaintiff in the year 1871, in payment of a debt due from the Eagle Insurance Company to him. After the said amendment of the charter of March 3, 1869, the Eagle Insurance Company did not, in fact, transact any fire, marine, or inland insurance business, or do any other business than such as was authorized by the original charter.

"Second Special Defense.— We find all the foregoing facts, and also the following, to-wit: Under the second section of the charter of the Provident Life Insurance and Investment Company, calls were made upon the defendants in September, 1869, for the payment of an additional assessment of twenty per cent upon their stock, payable October 25, 1869,

Ashton v. Burbank.

which they neglected and refused to pay, and that the board of directors of the Eagle Insurance Company, on the 2d day of December, 1869, declared all the stock on which said assessment had not been paid, including defendants' said stock, forfeited; and soon after new stock subscriptions were received from new subscribers, and the old directors went out, and new directors, elected by the new stockholders, came in; and the Eagle Insurance Company ceased to do active business or issue new policies after January, 1870."

The provision in the charter of the company in relation to the forfeiture of stock is, that if any shareholder or subscriber shall neglect to pay a call for a specified number of days, "it shall be lawful for the directors to declare the shares forfeited to the company, and all previous payments made thereon."

Gilman, Clough, & Wilde, for the plaintiff.

E. C. Palmer, for the defendants.

DILLON, Circuit Judge.- We hold the following propositions:

1. The plaintiff taking the note in suit directly from the company, long after it was due, and after the change in the charter, and after the action of the company forfeiting the defendants' stock therein, stands precisely in the place of the company, and cannot recover on the note unless the company could have recovered, had the action been brought by it.

2. The note being given for an unpaid stock assessment, represents, for all the purposes of this action, that assessment, and the note not having been paid, it follows that the defendants have not paid the stock assessment for which the note was given. Under its charter, the company had the power, if any assessment upon stock subscribed was not

Ashton v. Burbank.

paid, to forfeit the stock and all previous payments thereon; or, at its election, the company would have the right to sue for such assessment. But the two courses are inconsistent, and it must elect whether to sue for and recover the stock subscription, or to forfeit the stock. It cannot do both. Having elected, in this case, to forfeit the defendants' stock, it cannot afterwards recover for a prior unpaid assessment; and this doctrine, which was conceded in argument, is not, in our judgment, varied, as the plaintiff's counsel contends, by the circumstance that the company, at the time of the forfeiture of the stock, held the defendants' note for such prior unpaid assessment. (Small v. Herkimer Manuf. Comp. 2 Comst. 330.)

3. The change in the charter, by which a life and accident company was authorized to transact fire, marine, and inland insurance, is an organic change of such a radical character as to discharge previous subscribers to the stock of the company from any obligation to pay their subscription, unless the change is expressly or impliedly assented to by them. Here there was no such assent, and no acquiescence in the structural change made in the charter of the company. The company could not, against such a subscriber, maintain a suit to collect his subscription, and take the money and use it as capital for the transaction of business under the charter as altered. We think, in such a case, the subscriber is not bound to enjoin action under the amended charter, but may, if he elects, defend against an action to recover on his subscription to the stock.

If the company accepted the amended charter, as it did by adopting the new name, it is not essential to such a defense to show that at the time of the trial the corporation had actually exercised the enlarged powers conferred upon it. The defendants are not bound, on their subscription, to pay to the company money which, if paid, may be used as

McCarty v. Mann.

capital to carry on the business authorized by the amended charter.

NELSON, J., concurs.

JUDGMENT FOR THE DEFENDANTS.

NOTE.-Liability of stockholder to creditors: Haskins v. Harding, ante; Payson v. Stoever, ante.

MCCARTY V. MANN, et al.

1. Congress has power to re-instate an entry of public lands which has been cancelled by the commissioner of the general land office, and to provide that this shall be done as of the date of the original entry, so that it shall inure to the benefit of the grantees of the person who originally made the entry.

2. Under such a provision the re-instated entry of the land inures to the benefit of such grantees, irrespective of the fact whether they were grantees with or without warranty.

(Before DILLON and NELSON, JJ.)

Public Lands.- Power of Congress.— Re-instatement of Cancelled Entry by Congress.-Effect.-Act of July 27, 1854, Construed.

THIS is a bill in equity to quiet title, and involves the validity and construction of an act of Congress approved July 27th, 1854 (10 Stats. at Large, 798). This act is as follows: "Be it enacted, fc., That the entry by Peter Poncin of the north half of the south-east quarter, &c., sec. 36, &c., cancelled by the commissioner of the general land office, be and the same is hereby allowed and reinstated as of the date of the said entry, so that the title to the said lands may inure to the benefit of his grantees as far as he may have conveyed the same;" then follows a proviso that Poncin

McCarty v. Mann.

shall make payment therefor at the land office, and "thereupon a patent shall issue in the name of the said Peter Poncin for said lands."

On the 13th of February, 1850, Peter Poncin located a land warrant on the land described in the act. On March 28th, 1850, he conveyed the same by warranty, for the consideration of $150, to one Pepin, and Pepin, on March 29th, 1850, conveyed by warranty to French, and French, in consideration of $500, on March 29th, 1851, conveyed by quit claim to Elfelt. On the 10th day of March, 1852, the commissioner of the general land office cancelled the location of Poncin. On the 13th day of October, 1853, Elfelt conveyed to Van Etten. The title then stood in Van Etten at the date of the afore-mentioned act of July 27th, 1854. On the 31st day of October, 1854, Poncin paid for the land at the land office, and on the 24th day of March, 1855, received a patent under and reciting the said act of July 27th, 1854.

The defendants claim under the said deed of March 29th, 1851, from French to Elfelt. After the patent to Poncin was issued, viz., on the 14th day of January, 1856, French made another deed by quit claim to one Furber, and it is under this deed that the plaintiff claims title. Neither party is in possession. The land was laid out in July, 1855, as "Robinson & Van Etten's addition to St. Paul," and is now of great value.

W. H. McCarty, and Gilman, Clough, & Wilde, for the plaintiff.

Geo. L. Otis, for the defendants.

DILLON, Circuit Judge.-The location of Poncin was cancelled by the commissioner because it was made on land which had been duly reserved from sale as school land, and the government, by the second section of the act of July