Compton v. Chelsea

a vote of the majority of the stockholders, and not otherwise. At the same time, and after the adoption of the by-laws, the trustees adopted the prospectus aforesaid as the prospectus of the defendant. On the 14th of December, at a meeting of the stockholders, the subscribers were assigned the apartments selected by them; No. 2 on the second floor, the apartment in question, being assigned to A. B. Cruikshank. No. 2 is now numbered 21. It further appeared that the certificate issued to T.C. Van Brunt was surrendered, and a new certificate, No. 21, issued to him. These shares stood in his name, and no transfer of the stock was made to the plaintiff on the books of The Chelsea until May, 1885, although it appears that a lead-pencil mark had been made upon the books of the corporation, showing that plaintiff was the owner of this stock, which said pencil mark resulted probably from the knowledge that Van Brunt had sold this stock to the plaintiff some time in January, 1883. The defendant commenced the construction of the house early in 1883. At a meeting of the stockholders, held in December, 1882, the plan of the building was changed,' whereby the cost was very much increased;.and in January, 1884, the capital stock was increased from $290,000 to $500,000, such additional stock being distributed among the stockholders without anything being paid therefor. On the 23d of J anuary, 1884, the trustees passed a resolution recommending to the stockholders at a meeting to be called thereafter that an annual rental, equivalent to 10 per cent, of the face valuation of the stock held by each on the basis of $500,000, be the rental fixed by this company to its stockholders on their respective apartments. On the 29th January, 1884, and before the distribution of the increased stock, a meeting of the stockholders was held, at which more than a majority were present, and unanimously passed resolutions—-Van Brunt, the holder upon the books of the company of the 70 shares, representing apartment No. -21, being present, and voting therefor—that an annual rent equivalent to 10 per cent., of the value of the stock on the basis of an issue of $500,000 should be charged and collected from each stockholder, and that the trustees were authorized to draw up a suitable form of lease to be executed to stockholders upon said basis. In June, 1884, the trustees ordered the leases to stockholders to be executed by the president. In September, 1884, the trustees approved and adopted the form of lease. In October, 1884, the building having been completed, the plaintiff obtained the keys of the apartment assigned to him, and took possession of his apartments, and expended certain moneys on the completion of the same. On the 1st of December, 1884, the plaintiff rented ■ the premises. On the 11th of May, 1885, the plaintiff surrendered the certificate which he had received from Van Brunt of the 70 shares, and received in lieu thereof the original 70 shares and 67 additional shares of the increased stock, for which nothing was paid, and thus became for the first time a stockholder of record in the company. In the summer of 1885 a lease of the apartments, duly executed by the president, was tendered to him. He declined not only to accept this but any lease. In October, 1886, the apartments having been vacated by the plaintiff’s tenant, the defendant took possession, .whereupon the plaintiff brought this action of ejectment. Upon the trial a verdict was directed for the defendant, and a motion was made for a new trial, and denied, and from the judgment and order thereupon entered this appeal is taken.

The ground upon which the plaintiff claims the right to succeed seems to be that by subscribing under the representations contained in the prospectus he became an absolute owner, and entitled to the possession of the apartment represented by the 70 shares of stock, which he now holds. This might be true if there had not been a change of plans, of organization, and of system in the carrying out .of this enterprise. But it is urged that this change cannot affect the plaintiff, because he was not a party to it, and because .they cannot impress an additional condition upon the stock held b.y him from that

which it bore at the time oí its first issuance; and our attention is called to the case of Driscoll v. Manufacturing Co., 59 N. Y. 96 . This was an action to compel the defendant to transieron its books stock purchased by the plaintiff. The defense was that the stock had formerly belonged to one Bradley, who at the time of his ownership was indebted to the defendant, and by virtue of a by-law then existing, adopted by the vote of Bradley, a transfer could not be made until the indebtedness was paid; and it was held that by a mere by-law they could not impose restrictions upon the transfer of personal property which were not authorized by the statutes. That case presents no parallel to the one at bar, because there was no inability on the part of these stockholders to depart from the terms of the contract made by the subscription to the stock and the prospectus if they saw fit; and this was all that was done,— done with the assent of the then holder of the stock to the change, and ratified by the plaintiff, who accepted the additional stock which was the result of that change; the position of the plaintiff being that he can hold this additional stock without in any way assuming any portion of the burden which this additional stock represented. The magnitude of the enterprise was increased, and this stock was issued to represent the increase. The value of the building to be erected was much greater than was originally contemplated; and this increase in stock was intended to represent the additional moneys which had been put into the building and had been raised upon mortgages upon tlie property. The plaintiff claims the right, after having accepted the stock representing this increased cost, to hold his apartment upon ' his original subscription, in a building much more expensive in character than the one to which he had subscribed. Even if the prospectus entitled the plaintiff, as matter of right, to this apartment without the payment of any rent, he, having assented to the new arrangement by the acceptance of tl stock, if in no other way, cannot now be heard to say that he is not bound by the proceedings of the stockholders. In the case cited, the purchaser of the stock claimed that by the by-laws of the corporation they could not impress a lien upon the stock which the statute did not authorize. In the case at bar, the plaintiff, for a consideration, having assented to the change in construction, proposes now to keep the consideration, and" recall the consent. We think that plaintiff is not now in a position to claim the apartments without contributing to the additional expenses incurred by and with his consent, in the construction of the building, even though he would have been entitled thereto bad he not acquiesced in and received some of the benefits of the. change. The judgment should be affirmed, with costs.