Gilmer v Morris.

It is well settled that a much shorter time will be allowed the pledgor within which to exercise the right of redemption where he seeks to make a profit out of the unexpected rise in the value of pledged stocks, than where he seeks merely to compel the pledgee to account for a surplus received by him from the sale of the stocks in ordinary cases. Schouler Bailments, 225. The case of Hancock v. Franklin Ins. Co., 114 Mass. 115, cited and relied on by appellant's counsel, was obviously a case of the latter kind, and was determined, strictly speaking, rather on the ground of the statute of limitations than upou any alleged staleness of the demand. This rule of redemption is clearly analogous to the one which requires the exercise of any similar option in property, real or personal, to be put in action with reasonable diligence. There is something in the nature of fluctuating stocks which makes the principle especially just when applied to them. As said by Mr. Justice MILLER, in a recent case. decided by the Supreme Court of the United States, "the injustice is obvious of permitting one, holding the right to assert an ownership in such property, to voluntarily await the event and then decide, when the danger which is over has been at the risk of another, to come in and share the profit.” Twin-Lick Oil Co. v. Marbury, 91 U. S. 587. The court observed further that while a different rule would apply to property not subject to rapid fluctuations in value, yet where property is of this character, courts require prompt action in all who hold an option, whether they will share its risks, or stand clear of them."

These observations apply with great force to this case. The stock in question is shown, at one time during the period it was pledged, to have been worth as little as twenty cents on the dollar. At the time of its sale by the defendant it was not above par. When the bill was filed it had rapidly increased in value, and during the progress of the cause reached about eight times its par value, or nearly forty times the lowest rate to which it had once fallen. It is manifest, that in cases in like this, justice can be administered only by curtailing the period allowed for exercising the option of redeeming within bounds which reasonably conform it to the equities of the peculiar emergency. Upon this state of facts we hold that the complainant's right of redemption was a stale demand. and must be deemed to have been barred by unreasonable delay in its assertion. Sleeping on his rights for so great a length of time constitutes a degree of laches now fatal to their enforcement.

Gilmer v. Morris.

There is another analogous view of this case, incidentally adverted to by us above, and which is equally fatal to the maintenance of the bill. It is the defense of the statute of limitations of six ground upon which the case was decided by the chancellor.

years, the

The transfer of the stock in controversy is something more than a mere pledge. It partakes of the nature of both a pledge and a mortgage, because the transferee holds both the possession and the title of thing transferred. The chief difference between a pledge and a mortgage is, that in the former possession is transferred, and in the latter title, usually unaccompanied by possession. No reason is perceived why the two forms of security may not be combined in one as is here done. Casey v. Cavoroe, 96 U. S. 467, 477. In Nabring v. Bank of Mobile, 58 Ala. 204, it was said, arguendo, that a transfer of stock, like that in the present case, was rather a pledge than a mortgage, following the view expressed in Wilson v. Little, 2 N. Y. 442; s. c., 51 Am. Dec. 307. But the decision of this point was a dictum, inasmuch as it was immaterial and unnecessary, the same result following whether the transfer was construed to be the one or the other. In this aspect of the law, to which I am not averse, there can be no room for disputation as to the fact that the case made by the bill was barred in six years from the day of forfeiture, there being no proof of any recognition of the complainant's title within this period, and therefore a presumed adverse holding by the defendant. Byrd v. McDaniel, 33 Ala. 18; Humphries v. Terrell, 1 Ala. 650; Waterman v. Brown, 31 Penn. St. 161, supra; Jones Chat. Mort., §§ 771-772.

The bill was properly dismissed, and the decree of the chancellor is affirmed.

CLOPTON, J., not sitting.

Decree affirmed.

Glenn v. Semple.

GLENN V. SEMPLE.

(80 Ala. 159.)

Statute of limitations — breach of agreement to pay stock subscription.

When the terms of a subscription to stock of a corporation bind the stock. holders to pay "in such installments as may be called for by said company, and one per cent at the time of subscription;" and the corporation, becoming embarrassed, executes a deed of assignment for the benefit of creditors, not having called in all the stock subscribed, the statute of limitations in favor of the stockholders, as to their unpaid subscriptions, does not begin to run until a decree is rendered by a court of equity under a bill filed by creditors, making an assessment and call for the unpaid subscriptions.

A

CTION for stock subscriptions. The opinion states the facts. The defendant had judgment below.

Wm. S. Thorington, for appellant.

SOMERVILLE, J. The present action is brought for a certain portion of the unpaid subscription to the capital stock of the National Express Company, a body corporate organized under the laws of the State of Virginia. The action is instituted by the plaintiff, as trustee, duly appointed by a court of competent jurisdiction, and fully authorized to sue. No question arises as to the personal disability of the plaintiff to maintain the action, nor is the jurisdiction of this court, which clothed him with his authority to sue, in any wise challenged. The only point raised by the record is, whether the action is barred by the statute of limitations of six years, which is the period fixed in this State for commencing actions founded on promises not under seal.

The subscription in question was made by the defendant in the year 1866, by which he agreed to pay to the National Express Company the sum of $1,000 "in such installments as may be called for by said company, and to pay one per cent at the time of subscription." The company was organized, and carried on business for many months, but becoming financially embarrassed, executed a deed of assignment, in September, 1866, conveying to certain trustees all of its property, including unpaid subscriptions to its capital stock, for the purpose of securing its creditors. In December, 1871, reditor's bill was filed in the Chancery Court at Richmond, the

Glenn v. Semple.

proceedings of which show proper jurisdiction of the subject-matter and of the parties, praying for the removal of the trustees ap pointed in the deed of trust, and the substitution of others in their stead; that the liabilities of the company be ascertained, and an assessment be made by authority of the court upon the unpaid capital stock for the purpose of discharging these liabilities. The court assumed jurisdiction of the cause and granted the prayer for relief, the plaintiff, as we have said, being substituted as trustee, and authorized to execute the trust. It being ascertained further that there remained uncalled for and unpaid the sum of $80 or eighty per cent on each share, it was ordered and decreed by the court, on December 14, 1880, that thirty per cent of the par value of each share of said stock be assessed and called for, this sum being required to pay the debts of the company.

Under this state of facts, the court below gave the general charge for the defendant, evidently adopting the view contended for by appellee's counsel, that the statute of limitations commenced to run in favor of the stockholders from the date of the execution of the deed of assignment by the company, of the year 1866.

It is insisted on the contrary, by the appellee's counsel, that the statute did not commence to run, by the terms of the subscription, until the assessment and call were made under authority of the Chancery Court; and that the charge of the Circuit Court was for this reason erroneous.

We are unable to resist the conviction that the latter view is the correct one, as better supported both by the test of reason and the weight of authority.

It may be regarded as axiomatic that it was the duty of the directors of this corporation, as faithful fiduciary agents, to administer with fidelity the trust which they had assumed. Among the plain duties imposed upon them by law was, to see that the property of the company was honestly appropriated to the payment of its just debts. The unpaid subscription to stock was a trust fund in their hands pledged for this purpose. They had the lawful authority to make a call for so great a percentage of these subscriptions as was needed to discharge these corporate liabilities, and their duty was commensurate with their power. This duty, it is made to appear, they neglected to perform. And in view of such negligence and wilful inaction on their part, it devolved upon a court of equity, on proper application, to afford the requisite re

Glenn v. Semple.

lief. It is a part of the inherent and original jurisdiction of such courts to compel the execution of trusts, and no plainer or more conspicuous illustration of this principle can be found than the frequent cases in modern times, where they have, by a strong arm, coerced the proper application of the assets of insolvent corporations to the satisfaction of their debts. It is now, accordingly, well settled that courts of equity may enforce the payment of stock subscriptions, where the directors have neglected or refused to make assessments and calls for them in the exercise of their proper fiduciary duty. Glenn v. Williams, 60 Md. 93; Sawyer v. Upton, 91 U. S. 56; Hall v. U. Ins. Co., 5 Gill, 484; Hatch v. Dana, 101 U. S. 205; Adler v. Milwaukee Bank Co., 13 Wis. 61; Ward v. Griswoldville Manfg. Co., 16 Conn. 593; Dalton, etc., R. Co. v. McDaniel, 56 Ga. 191.

But we do not understand the existence of this power in a court of equity to be seriously controverted. The point of contestation relates rather to the legal effect of its actual exercise, after it has been put in operation by a court of competent jurisdiction.

The question as to when the statute of limitations commenced to run depends, in this case, upon a proper construction of the contract of subscription. The promise of the defendant was to pay in such installments as may be called for by the board of directors of the company - which means in such sums and at such times as they might thereafter declare to be necessary. After the first assessment had been made and called in, it could not be known that any further call would ever be made. If the business of the company prospered, no further payments might probably be needed. But if bad management characterized its operations, or disaster beset it for any reason, such a call would be imperatively required. The defendant's contract therefore was not to pay absolutely or at all events, but upon a contingency- this contingency to be determined by the directors of the company, who were the mere agents of the stockholders, or in the event of their neglect or refusal to act, by the decree of a Court of Chancery.

The settled rule is, that where money is to be paid, or a thing is to be done, upon the happening of a contingency, or uncertain event, no cause of action accrues, and therefore no limitation can run until the contingency happens, or the event takes place. clear reason is, that until then there is no breach of the contract, the obligation of the promise being in the meanwhile suspended.

The