Opinion
June Term, 1821.
When a corporate body strikes off the name of one of its members without giving him previous notice of their intention so to do, and affording him an opportunity of being heard in his defense, a mandamus to restore will be granted.
THIS was an application for mandamus, originally made to the Superior Court of WAKE, and, upon its refusal to grant the writ, brought by the appeal of the petitioner to this Court. (275) The petitioner stated, on affidavit, that he subscribed for 250 shares in the Neuse River Navigation Company. established by acts of the Legislature, passed in 1812, ch. 89, and in 1816, ch. 16; that, for the purpose of paying his first installments on 1 May, 1818, he entered into a contract with the president and directors of the company, whereby he engaged, on his part, within six months, to afford a passage between Stone's Mills and Fort Barnwell, on the river Neuse, for boats carrying seven tons, and within three years for boats of fourteen tons. The president and directors, on their part, contracted, at the end of six months, or sooner, if the stipulated work were sooner completed, to pay to him $1,000, in addition to what he might be indebted for his stock, including the first payment of $10, and all further sums which the directors might have called for, and at the end of three year, or earlier, on completion of the work, to pay as much as would, with what he should have received, make up $30,000. If, at the end of three months from the date, the petitioner, should not have begun and made proportionate progress, the president and directors were at liberty to annual the contract, and claim of petitioner a penalty of $1,000; and so at any other time in the progress of the business, if the work should be unnecessarily delayed, a like power was reserved to them to annul the contract and claim the penalty. The petitioner further stated that, in pursuance of this contract, he immediately commenced his labors and effected the object, as far as time would permit, but was stopped by order of the directors, who, on 4 February, 1819, put an end to the contract, declaring it null. That the president and directors (without authority, and without giving the petitioner notice of their intention) had stricken his name from the list of subscribers, in consequence of which he had been denied his franchise of voting at a general meeting of the company. He therefore prayed a mandamus, to be restored to his franchise of a corporator, from which he (276) had been wrongfully removed.
A notice issued from the court below to the president and directors, by name, to show cause why a mandamus should not be granted, on the return of which the application of the petitioner was refused.
Gaston in support of the mandamus.
Seawell, contra.
This is a motion for a notice to issue to (278) the defendants to show cause why a mandamus should not issue against the defendants to restore the relator to his franchise as a corporator in the company. It appears from the affidavit that Delacy became a subscriber on 13 April, 1818, and was admitted as a corporator from thenceforth until after he made a contract with the president and directors, by which he was to pay for the stock he had subscribed to. If, after this contract had been put an end to, Delacy had been called upon to pay his subscription, and upon neglecting to do so, or on not showing a satisfactory reason for the neglect, he had been ejected from his place as a corporator, it would have been incumbent on the court to inquire into and give an opinion on the right of the stockholders so to proceed. What he could have shown on such a notice, either as payment or excusing the neglect, cannot be told; but, prima facie, we must take it to be the undoubted right of every man to receive notice of any proceeding against him by which he is to be deprived of acknowledged rights; and, for want of such notice in the present case, the rule ought to issue as prayed for in the petition.
By the fourth section of the act of 1812, ch. 88, which, by the act of 1816, ch. 16, as well as many other sections of the act of 1812, are adopted as part of the charter of the Neuse River Navigation Company, it is declared: "That each subscriber shall pay for every share by him or her subscribed, at the first general meeting, the sum of ten dollars to the treasurer of the company; and the names of those who fail to pay then and there may be struck off the books, and others complying with this regulation may take such shares." The name of Delacy was not struck off at the first meeting, nor did he make any payments on account of the shares subscribed for by him; but he states that, in lieu thereof, he contracted with the president and directors to do certain work on the river Neuse. He admits that the work was not completed, and that the president and directors declared the contract to be at an end, according to the power reserved to them in the contract to do so if they thought proper.
When this declaration was made, the parties stood in the same situation they were in at the first meeting, except that that meeting had passed away and it was too late to pay the first installment at that meeting. But when it shall be kept in view that it was by the consent, and no doubt at the request of Delacy, that payment had not been made, and that he had failed to do that which was a substitute for it, I think the equity and justice of the case, and the fair construction of the act of Assembly, would place the parties in the same situation at a subsequent meeting as they stood in at the first, so far, at least, as that Delacy then had the power and privilege of making payment, and, if he did not, that the stockholders had the right of striking his name from the list of subscribers for shares. But it seems that his name was struck off by the president and directors, and not by the stockholders at one of their meetings. I think the president and directors, in doing this, transcended the limits of their authority; but this entry, by which the name of (280) Delacy was stricken off, was afterwards virtually adopted by the stockholders as their act; for they refused to receive Delacy's vote at an election for president and directors, and, had he had due notice of such procedure before it took place, I think, from that time he would have ceased to be a member of the corporation. Nor do I think the case would have been altered from the consideration that he had been a member from their first meeting up to that time; for every person who had subscribed for shares before he paid his first installment was a member to many purposes. He might, perhaps, have voted for president and directors; for passing by-laws for the government of the corporation. He had, perhaps, to the last moment of the meeting to pay his first installment. And for the same reason Mr. Delacy might have exercised the right of a corporator at any subsequent meeting before his name was struck for failing to make payment. But I suppose he possessed to more rights at any subsequent meeting before his name was struck off than he did at the first meeting. It has been said that Delacy possessed more shares than the stockholders who struck off his name from the books, and that there were not a majority, of course, at that meeting. If those who were present were qualified by having paid up their installments, and were a majority, of those that had done so, I think they were authorized to act as they did; for Delacy, owing to his delinquency, might by them be stricken off, as he might at the first meeting have been. But what is to be done if Delacy refuses to pay anything due on his shares? I cannot think the law contemplated a sale of them; for, besides the positive words in the act that directs the names of delinquents to be stricken off, the fourth section of the act of 1816, speaking of sales (not, to be sure, with a view to this question), speaks of sales of balances due, meaning, no doubt, balances due after payments had been made. To purchase a share when nothing had been (281) paid would be to subscribe for a share. But another circumstance ought not to pass unnoticed, and that is, that Delacy had not notice that the corporation was about to strike off his name from their books. If he had had notice, he might have shown, for aught that appears, that he had paid his installments or that he was ready to do so. For this reason, and for this reason only, I am willing that a mandamus should issue.
The applicant was once a corporator, for it was not imperative on the stockholders at their first meeting to strike off those who failed to pay. They did not do it; they received him and others without requiring payment; he voted with them as a corporator; in fact, their order of removal shows that he was, before the removal, one of their body. I shall pass over every other point made in the case but one; that is, that the applicant was removed by the stockholders at some meeting subsequent to the first, for failing to make payment, and this without any notice to him; for it may be considered as a removal by the stockholders; they recognize the act of the directory. It is a fundamental principle of our law, and recognized in every court of justice (and this corporation was a court when passing on the rights of its members), that no man shall be condemned or prejudiced in his rights without an opportunity of being heard. No matter how desperate his case may appear to be, the humanity of the law says, perchance he may have something to say in his defense. We will, therefore, not forestall him by saying he can allege nothing; but, after having heard him, will pass upon his case. For this reason, I think the mandamus should go; for, without prejudging the case, we do not know but that the applicant might have paid, or shown some satisfactory reason for not paying, or that he then might have paid, for it was not (282) even then too late. As to some cases which are to be found in Term Reports, that no notice is required when it appears clearly that the applicant has nothing to offer in his defense, for the present it is a sufficient answer to say that it does not appear that Delacy had nothing to offer, or could not, by paying the money, avert the forfeiture. When a case of that kind arises, it will then be time enough to examine the soundness of the doctrine. I am therefore of opinion that the Superior Court of Wake should issue a mandamus to the corporation, commanding it to restore the applicant to the rights of a corporator, or show cause to the contrary.
Cited: S. v. Jones, 23 N.C. 134; McCall v. Justices, 44 N.C. 303.